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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant  ☒                            Filed by a party other than the Registrant  ☐

Check the appropriate box:

FIRST AMERICAN FINANCIAL CORPORATION

(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

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March 31, 2017

Dear Fellow Stockholder,

You are cordially invited to attend our annual meeting of stockholders at 1 p.m. Pacific time on May 9, 2017, at the executive offices of First American Financial Corporation, located at 1 First American Way, Santa Ana, California 92707.

With this letter, we are including the notice for the annual meeting, the proxy statement and the proxy card. We are also including a copy of our 2016 annual report. A map and directions to our executive offices can be found on the inside back cover of the proxy statement.

We have made arrangements for you to vote your proxy over the Internet or by telephone, as well as by mail with the traditional proxy card. The proxy card contains instructions on these methods of voting.

Your vote is important. Whether or not you plan on attending the annual meeting on May 9, 2017, we hope you will vote as soon as possible.

Thank you for your continued support of First American Financial Corporation.

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To be Held on May 9, 2017

The annual meeting of stockholders of First American Financial Corporation, a Delaware corporation (our “Company”), will be held at 1 p.m. Pacific time on May 9, 2017, at the executive offices of the Company, located at 1 First American Way, Santa Ana, California 92707, for the following purposes:

Only stockholders of record at the close of business on March 16, 2017 are entitled to notice of the meeting and an opportunity to vote.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 9, 2017: First American Financial Corporation’s notice of annual meeting and proxy statement, annual report and other proxy materials are available at www.firstam.com/proxymaterials.

We hope you will attend the meeting to vote in person. However, if you are unable to attend the meeting and vote in person, please submit a proxy as soon as possible, so that your shares can be voted at the meeting in accordance with your instructions. You may submit your proxy (1) over the Internet, (2) by telephone, or (3) by mail. For specific instructions, please refer to the questions and answers commencing on page 62 of the proxy statement and the instructions on the proxy card.

Jeffrey S. Robinson

Vice President and Secretary

Santa Ana, California

March 31, 2017

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PROXY STATEMENT

Solicitation of Proxies by the Board of Directors

Our board of directors (our “Board”) is soliciting proxies from holders of our common stock for use at the annual meeting of our stockholders to be held on May 9, 2017, at 1 p.m. Pacific time. The meeting will be held at the executive offices of First American Financial Corporation, a Delaware corporation (our “Company” or “First American”), located at 1 First American Way, Santa Ana, California 92707. We have included a map and directions to our executive offices on the inside back cover of the proxy statement for your convenience.

We are mailing this proxy statement and the enclosed proxy card, notice of annual meeting, stockholders letter and 2016 annual report to our stockholders on or about March 31, 2017. In lieu of a proxy card, holders of shares held in street name through a bank, broker or other nominee are receiving a voting instruction form from their bank, broker or other nominee. As used herein, references to “proxy” or “proxy card” also refer to the voting instruction form provided to street name holders.

The remainder of this proxy statement has been divided into four sections. You should read all four sections.

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Information Regarding the Nominees for Election

The following list provides information with respect to each person nominated and recommended to be elected as a Class I director by our Board, to serve for a three-year term expiring on the date of the 2020 annual meeting of stockholders. Each of the nominees is currently serving as a director of the Company.

	Age: 70                      Director since: 2010 Committees:          Audit (chair)             Executive			JAMES L. DOTI     Mr. Doti has been a director since June 2010, when we separated from The First American Corporation. He is president emeritus and the Donald Bren Distinguished Chair of Business and Economics at Chapman University and served as Chapman’s president from 1991 to 2016. He served as a director of The First American Corporation from 1993 until the separation. He served on the boards of Standard Pacific Corp. until 2012 and Fleetwood Enterprises, Inc. until 2009. Given his experience as president of Chapman University and with a doctorate in economics from the University of Chicago, Dr. Doti gives our Company insight into the organizational challenges that large companies face and the impact of the economic environment on the Company.
	Age: 71                      Director since: 2011 Committees:             Compensation (chair)			MICHAEL D. MCKEE     Mr. McKee has been a director since March 2011. He serves as executive chairman of HCP, Inc. (NYSE: HCP), a publicly traded real estate investment trust for which he has been a director since 1989. During 2016, he also served as interim chief executive officer and president of HCP. From 2010 to 2016, Mr. McKee was chief executive officer of Bentall Kennedy (U.S.), a registered real estate investment advisor. Mr. McKee also served as the chief executive officer of The Irvine Company, a privately-held real estate development and investment company, from 2007 to 2008, as vice chairman of its board of directors from 1999 to 2008 and as an executive officer of that company since 1994. Prior to that, he was a partner with the law firm of Latham & Watkins LLP from 1986 to 1994. In addition, Mr. McKee is the Chairman of Realty Income Corporation (NYSE: O) and the Tiger Woods Foundation. He previously served as a director of Mandalay Resort Group, Irvine Apartment Communities, Inc. and Oasis Residential Inc. Mr. McKee brings to the Board significant operating and executive management experience. This experience, combined with Mr. McKee’s extensive background in the real estate industry, facilitates the Board’s oversight of the Company’s operations and enhances its ability to assess strategic opportunities.
	Age: 72                      Director since: 2011  Committees:             Audit                         Executive			THOMAS V. MCKERNAN     Mr. McKernan has been a director since March 2011. He serves as chairman of the board of AAA—Auto Club Enterprises and the Automobile Club of Southern California (the “Auto Club”). Mr. McKernan served as chief executive officer of the Auto Club from 1991 until his retirement in 2012. Mr. McKernan also serves as a director of Payden & Rygel Investment Group and as a trustee of certain funds associated therewith. Other positions held by Mr. McKernan include directorships with various companies and membership on various advisory councils. In addition, he served as vice chairman of the board of California Physicians Service, Inc., which operates as Blue Shield of California, and its subsidiary, Blue Shield of California Life & Health Insurance Company, until September 2009. Through his operating and executive management experience, much of it gained in the process of transforming the Auto Club into a leader in the California insurance industry, Mr. McKernan brings to the Company valuable insight into the challenges facing an insurance company that is executing on a strategic growth plan. His extensive experience participating in the management of insurance company investment portfolios also has been of significant value to the Company.

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Information Regarding the Other Incumbent Directors

The following list provides information with respect to the individuals currently serving as Class II directors, whose current term expires at the 2018 annual meeting of stockholders, followed by similar information with respect to the Class III directors, whose term expires in 2019.

Class II Directors—Term Expiring 2018

	Age: 58                      Director since: 2010 Committees:               Executive			DENNIS J. GILMORE     Mr. Gilmore is our chief executive officer and has been a director since June 2010, when we separated from The First American Corporation. From 2008 until the separation, he served as chief executive officer of The First American Corporation’s financial services group. He also served as chief operating officer of The First American Corporation from 2004 to 2008. As the Company’s chief executive officer, Mr. Gilmore provides our Board of Directors in-depth insight into the Company’s businesses, challenges and opportunities, as well as significant experience in the real estate settlement services industry.
	Age: 63                      Director since: 2015 Committees:               Governance			MARGARET M. MCCARTHY     Ms. McCarthy has been a director since June 2015. She has served as executive vice president of operations and technology for Aetna, Inc., one of the nation’s leading diversified health care benefits companies (NYSE: AET), since 2010. She is responsible for innovation, technology, data security, data analytics and service operations. Prior to joining Aetna in 2003, she served in information technology-related roles at CIGNA Healthcare and Catholic Health Initiatives, among others. Ms. McCarthy also worked in technology consulting at Accenture and was a consulting partner at Ernst & Young. She is a director of vAmour, a data center and cloud security company, and also serves on various advisory boards and councils, including for IBM, Financial Services Information Sharing and Analysis Center, and the MIT Center for Information Systems Research. Given her extensive experience managing large groups of employees, complex processes and enterprise-critical technology, Ms. McCarthy brings to the Board valuable insights into areas of critical import to the operations of the Company.
	Age: 77                      Director since: 2010 Committees:              Governance (chair)			VIRGINIA M. UEBERROTH     Ms. Ueberroth has been a director since June 2010, when we separated from The First American Corporation. She is chairman of the Ueberroth Family Foundation, a philanthropic organization. She retired as a director of Hoag Memorial Hospital Presbyterian in 2016. In addition, she served as a director of The First American Corporation from 1988 until the separation. Through Ms. Ueberroth’s experience in philanthropic causes, the Company derives an appreciation for its stakeholders in the community.

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Class III Directors—Term Expiring 2019

	Age: 69                     Director since: 2010 Committees:            Executive                  (chair)			PARKER S. KENNEDY     Mr. Kennedy serves as chairman of the Board and has been a director of the Company since June 2010, when we separated from The First American Corporation. Mr. Kennedy served as executive chairman of the Company from the separation until his retirement as an employee in February 2012. From 2003 until the separation, he served as The First American Corporation’s chairman and chief executive officer. Previously he also served as The First American Corporation’s president from 1993 to 2004. He served as a director of The First American Corporation and its successor entity, CoreLogic, Inc., from 1987 to 2011, and was CoreLogic, Inc.’s executive chairman from the separation to May 2011. Mr. Kennedy also served on the First Advantage Corporation board until 2009. We believe that Mr. Kennedy, who has worked with us in various capacities for over 40 years, has unparalleled executive experience in our industry. He also brings to the Company an incomparable understanding of our history and culture.
	Age: 62                      Director since: 2013 Committees:            Audit                         Compensation			MARK C. OMAN     Mr. Oman has been a director since March 2013. In 2011, he retired from Wells Fargo & Company, after serving it or its predecessors since 1979. At Wells Fargo he held numerous positions, including senior executive vice president (home and consumer finance) from 2005 until his retirement and group executive vice president (home and consumer finance) from 2002 to 2005. Mr. Oman also served as a director and the chief executive officer of Wachovia Preferred Funding Corp. from 2009 to 2011. He is currently involved with several private ventures and is a director of American Caresource Holdings, Inc. Mr. Oman brings to the Board important insights into the mortgage market and working with large mortgage lenders.

See the section entitled “Security Ownership of Management,” which begins on page 18, for information pertaining to stock ownership of our directors. There are no family relationships among any of the directors or nominees or any of the executive officers of the Company. There are no arrangements or understandings between any director and any other person pursuant to which any director was or is to be selected as a director.

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Item 1.    Election of Class I Directors

Our certificate of incorporation provides for a classified Board. Each person elected as a Class I director at the annual meeting of stockholders will serve for a three-year term expiring on the date of the 2020 annual meeting and until his successor in office is elected and qualified. Our Board has nominated the following individuals for election as Class I directors:

Unless otherwise specified by you in your proxy card, the proxies solicited by our Board will be voted “FOR” the election of the Class I director nominees. If any nominee should become unable or unwilling to serve as a director, the proxies will be voted for such substitute nominee(s) as shall be designated by our Board. Our Board presently has no knowledge that any of the nominees will be unable or unwilling to serve.

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Item 2.    Advisory Vote to Approve Executive Compensation

Pursuant to Section 14A of the Securities Exchange Act of 1934 and Securities and Exchange Commission (“SEC”) rules, we are seeking the advice of our stockholders on the compensation of our named executive officers as presented in the “Executive Compensation” section of this proxy statement commencing on page 26. Specifically, we are seeking stockholder approval of the following resolution:

“RESOLVED, that the stockholders of First American Financial Corporation approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, the 2016 Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 2017 annual meeting of stockholders.”

We refer to this proposal as a “Say on Pay” proposal. As part of its process in determining executive compensation levels for 2016, the Compensation Committee has reviewed the results of last year’s Say on Pay proposal, in which approximately 96% of the Company’s shares present and entitled to vote approved 2015 executive compensation. The stockholder support for the prior Say on Pay proposal reinforces the Compensation Committee’s belief that it should continue its practice of implementing and overseeing executive compensation programs that provide for a substantial portion of the executive officer’s total compensation to be related to the Company’s consolidated financial performance. It also reinforces the Compensation Committee’s sense that, for executive officers, the mix of compensation should be weighted heavily toward at-risk pay, in particular, the annual incentive bonus (a portion of which consists of equity vesting over four years) and should include a substantial portion of equity. This is consistent with the overall philosophy of maintaining a pay mix that results fundamentally in a pay-for-performance orientation and a strong alignment between the interests of executive officers and long-term stockholders.

The Compensation Committee (the “Committee”) believes the Company’s management team performed well in 2016. The Company’s performance improved over a strong 2015, with revenue growing 7.7% to $5.6 billion. Reflecting continued vigilance on expenses, income before income taxes grew 10.4% to $477.6 million and pre-tax margin was 8.57%, up 21 basis points over the prior year. Return on average total equity improved from 10.8% in 2015 to 11.9% in 2016. During the year, the Company terminated its legacy pension plan. While the Company expects the termination to result in significant annual savings in the future, it generated a significant loss during the year. In particular, the termination reduced pre-tax net income by $66.3 million, pre-tax margin by 118 basis points and return on average total equity by 130 basis points.

The Company continued to make significant strides toward achieving its long-term strategic goals. Though market share in its US title insurance business decreased slightly, during the year the Company completed a number of strategic acquisitions to grow and strengthen the Company’s core title and settlement business. The Company continued to invest in its database of real property records, which is now the most comprehensive database of its kind in the United States. The Company also continued its efforts to leverage these databases to increase operational efficiency, to more effectively manage risk in its title insurance business and to introduce new products to the market. Reflecting its commitment to drive return for its stockholders, during the year the Company increased its cash dividend by 36% from an annual rate of $1.00 to $1.36 per share and achieved a total stockholder return of 5.2%.

The full results of the 2016 executive compensation program are included in the section entitled “Compensation Discussion and Analysis” below commencing on page 26. Stockholders are urged to read the Compensation Discussion and Analysis as well as the 2016 Summary Compensation Table and related compensation tables and narrative, appearing on pages 45 through 57, in their entirety.

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While this vote to approve executive compensation is not binding, the Compensation Committee intends to review the results of the vote in connection with its ongoing analysis of the Company’s compensation programs. The Company expects to include a Say on Pay proposal in its proxy materials on an annual basis and, thus, we expect that the next Say on Pay proposal will occur at the Company’s 2018 annual meeting.

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Item 3.    Advisory Vote on the Frequency of the Executive Compensation Vote

Section 14A of the Securities Exchange Act of 1934 and SEC rules require us to seek the advice of our stockholders as to whether a vote to approve the Company’s executive compensation, like the one described in Item 2, should be held every one, two or three years. Our Board is recommending a vote every year.

There appear to be valid reasons behind selecting any of these options. For example, a less than annual frequency may permit stockholders to focus more on overall design issues rather than details of individual decisions, and might permit stockholders who receive proxy statements from many companies to invest a more appropriate amount of time in analyzing their companies’ executive compensation proposals. We believe, however, that an annual vote gives stockholders the best opportunity to provide prompt feedback to the Company and to react to emerging trends in compensation. In addition, we believe that an annual frequency enhances the Compensation Committee’s ability to ascertain the reasons for any negative feedback received from the stockholders, as well as its ability to respond appropriately and promptly to any such feedback.

You should mark your proxy for one year, two years or three years based on your preference as to the frequency with which you believe an advisory vote on such compensation should be held. You may also abstain. While the vote is advisory and not binding on the Board of Directors, the Board has determined that it intends to implement the frequency that is approved by the stockholders. The Board may, however, in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.

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Item 4.    Approval of the Performance Criteria, Establishment of a Director Compensation Limit and Amendment to Individual Annual Share Award Limits Under the Company’s 2010 Incentive Compensation Plan

Overview

The Company’s 2010 Incentive Compensation Plan (the “Plan”) provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other stock-based awards to non-employee directors of the Company and officers and eligible employees of the Company and any subsidiaries and affiliates. The Plan became effective on May 28, 2010 upon its adoption by the Board of Directors and approval by the Company’s sole stockholder at that time, The First American Corporation. In order to allow for awards under the Plan to qualify as tax-deductible performance-based compensation under Section 162(m) of the Internal Revenue Code (the “Code”), the Company asked, and the stockholders approved, the material terms of the performance criteria under the Plan at its 2012 Annual Meeting of Stockholders.

The Company is once again asking stockholders to approve the material terms of the performance criteria under the Plan for purposes of Section 162(m) of the Code. In addition, stockholders are being asked to approve the following amendments to the Plan:

Why You Should Vote to Approve the Individual Limit Amendment and the Director Compensation Amendment

The current individual annual limits under the Plan are 125,000 shares for restricted stock and restricted stock units, 125,000 shares for performance shares and performance units, and 125,000 shares for other-stock based awards. The Board does not believe that these current individual annual limits provide adequate flexibility to continue to attract, motivate and retain qualified employees, and provide them with the incentive to maximize long-term stockholder returns and achieve long-term objectives that will inure to the benefit of our stockholders. The Board believes that the Individual Limit Amendment will provide the necessary flexibility to achieve these goals.

The Board believes it is in the best interests of the stockholders to approve the Director Compensation Amendment to impose an upper limit on the compensation the Company pays to its non-employee directors each calendar year, including but not limited to compensation issued under the Plan.

The following factors were taken into consideration with respect to the Individual Limit Amendment and the Director Compensation Amendment:

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Why You Should Vote to Approve the Performance Criteria Under the Plan

The Board recommends that the Company’s stockholders approve the performance criteria under the Plan to facilitate the tax deductibility of awards under the plan as performance-based compensation under Section 162(m) of the Code.

Section 162(m) of the Code

The Board believes that it is in the best interests of the Company and its stockholders to continue to provide for an equity incentive plan under which compensation awards made to the Company’s executive officers are eligible to qualify for deductibility by the Company for federal income tax purposes. Accordingly, the Plan is designed to permit the grant of awards that are intended to qualify as “performance-based compensation” not subject to Section 162(m)’s $1,000,000 deductibility cap; however, there can be no guarantee that amounts payable under the Plan will be treated as qualified “performance-based compensation” under Section 162(m). In general, under Section 162(m), in order for the Company to be able to deduct compensation in excess of $1,000,000 paid in any one year to the Company’s chief executive officer and certain other executive officers, such compensation must qualify as “performance-based.” One of the requirements of “performance-based” compensation for purposes of Section 162(m) is that the material terms of the performance criteria under which compensation may be paid be disclosed to and approved by the Company’s stockholders at least once every five years. For purposes of Section 162(m), the material terms include (i) the employees eligible to receive compensation, (ii) a description of the business criteria on which the performance criteria is based and (iii) the maximum amount of compensation that can be paid to an employee under the performance criteria. With respect to the various types of awards under the Plan, each of these aspects is discussed below, and, as noted above, stockholders are being asked under this proposal to approve each of these aspects of the Plan for purposes of the approval requirements of Section 162(m).

Plan Summary

The following summary of the material terms of the Plan is qualified in its entirety by reference to the full text of the Plan, which is set forth in Appendix B to this proxy statement.

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Administration

The Plan is administered by the Compensation Committee of the Board. Subject to the express provisions of the Plan, the administrator is authorized and empowered to do all things that it determines to be necessary or appropriate in connection with the administration of the Plan. In addition, the Compensation Committee may delegate any or all aspects of its responsibilities and powers under the Plan to any persons; provided, however, that the Compensation Committee may not delegate its authority to correct defects, omissions or inconsistencies in the Plan.

Participants

Any person who is designated as an employee of the Company or of any subsidiary or affiliate and any non-employee director of the Company is eligible for selection by the administrator for the grant of awards under the Plan. Options intending to qualify as “incentive stock options” within the meaning of Section 422 of the Code may only be granted to employees of the Company or any subsidiary. Approximately 19,267 employees and 7 non-employee directors currently qualify to participate in the Plan.

Shares Subject to the Plan and to Awards

The total number of shares of the Company’s common stock that may be delivered pursuant to awards under the Plan is 16,000,000. Such shares may be either authorized and unissued shares or previously issued shares acquired by the Company or any subsidiary. Shares subject to awards that have expired or been terminated, cancelled, forfeited or otherwise not issued under an award and shares subject to awards settled in cash are available for delivery in connection with future awards under the Plan; provided, however, that (i) all shares covered by a stock appreciation right, to the extent that it is exercised, and whether or not shares are actually issued to the participant upon the exercise of the stock appreciation right and (ii) all shares withheld by the Company to pay the exercise price of an option and/or the withholding taxes related to an award reduce the total number of shares available for delivery under the Plan. Any shares delivered under the Plan upon exercise or satisfaction of a substitute award in connection with any acquisition, merger, consolidation or otherwise do not reduce the shares available for delivery under the Plan.

The aggregate number of shares subject to options granted during any calendar year to any one participant may not exceed 500,000. The aggregate number of shares subject to stock appreciation rights during any calendar year to any one participant may not exceed 500,000. Subject to stockholder approval of this proposal, the aggregate number of shares subject to awards of (i) restricted stock or restricted stock units granted during any calendar year to any one participant may not exceed 200,000, (ii) performance shares or performance units during any calendar year to any one participant may not exceed 200,000, and (iii) other stock-based awards during any calendar year to any one participant may not exceed 200,000 shares.

Option Awards

The administrator establishes the exercise price per share under each option, which, other than in the event of options granted in connection with a merger or other acquisition, may not be less than the fair market value of a share on the date the option is granted. The administrator establishes the term of each option, which in no case may exceed a period of ten (10) years from the date of grant. Options granted under the Plan may either be Incentive Stock Options (“ISOs”) or options which are not intended to qualify as ISO’s, called nonqualified stock options (“NQSOs”). ISOs may only be granted to employees. An option granted under the Plan will not be considered an ISO to the extent that it, together with any other ISOs under the Plan and any other incentive stock option plans, are exercisable for the first time by any participant during any calendar year with respect to shares having an aggregate fair market value in excess of $100,000 as of the time the option with respect to such shares is granted. Other than in connection with a change in the Company’s capitalization, at any time when the exercise

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price of an option is above the fair market value of a share, the Company may not, without stockholder approval, reduce the exercise price of such option and may not exchange such option for cash or a new award with a lower (or no) exercise price.

Stock Appreciation Rights

A stock appreciation right provides the right to the monetary equivalent of the increase in value of a specified number of shares over a specified period of time after the right is granted. Stock appreciation rights may be granted to participants either in tandem with or as a component of other awards granted under the Plan (“tandem SARs”) or not in conjunction with other awards (“freestanding SARs”). All freestanding SARs are to be granted subject to the same terms and conditions applicable to options as set forth above and in the Plan and all tandem SARs are to have the same exercise price, vesting, exercisability, forfeiture and termination provisions as the award to which they relate. Other than in connection with a change in the Company’s capitalization, at any time when the exercise price of a stock appreciation right is above the fair market value of a share, the Company may not, without stockholder approval, reduce the exercise price of such stock appreciation right and may not exchange such stock appreciation right for cash or a new award with a lower (or no) exercise price.

Restricted Stock and Restricted Stock Units

Restricted stock is an award or issuance of shares under which the grant, issuance, retention, vesting and/or transferability is subject during specified periods of time to conditions (including continued employment or performance conditions) and terms as the administrator deems appropriate. Restricted stock units are awards denominated in units of shares under which the issuance of shares is subject to conditions (including continued employment or performance conditions) and terms as the administrator deems appropriate. Participants holding shares of restricted stock granted under the Plan may exercise full voting rights with respect to those shares during the period of restriction. Participants do not have voting rights with respect to shares underlying restricted stock units unless and until such shares are reflected as issued and outstanding shares on the Company’s stock ledger. Participants in whose name restricted stock is granted are entitled to receive all dividends and other distributions paid with respect to those shares, unless determined otherwise by the administrator.

Performance Units and Performance Shares

Performance units and performance shares confer upon the participant the opportunity to receive shares or cash upon the attainment of performance and/or satisfaction of other terms and conditions determined by the administrator. Each performance unit has an initial value that is established by the administrator at the time of grant. Each performance share has an initial value equal to the fair market value of a share on the date of grant. Performance units and/or shares are earned based on the achievement or satisfaction of the corresponding performance criteria and/or other terms and conditions. Earned performance units and performance shares may be paid in the form of cash or shares, or a combination of the two, at the discretion of the administrator. Participants receiving performance units or performance shares only have the rights of a stockholder with respect to shares of common stock, if any, actually received by the participant upon satisfaction or achievement of the terms and conditions of such award and not with respect to shares subject to the award but not actually issued to the participant.

Other Stock-Based Awards

The administrator may grant types of equity-based or equity-related awards not otherwise described by the terms of the Plan in such amounts and subject to the provisions of the Plan and such other terms and conditions as the administrator shall determine.

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Deferral of Gains

The administrator may, in an award agreement, provide for the deferred delivery of shares or payment of cash, as applicable, upon settlement, vesting or other events with respect to restricted stock or restricted stock units, performance units or performance shares or other stock-based awards.

Qualifying Performance Criteria

The administrator may establish performance criteria and levels of achievement versus such criteria that will determine the number of shares, units or cash to be granted, retained, vested, issued or issuable under or in settlement of an award or the amount payable pursuant to an award, which criteria may be based on “qualifying performance criteria” (as described below) or other standards of financial performance and/or personal performance evaluations. In addition, the administrator may specify that an award or a portion of an award is intended to satisfy the requirements for “performance-based compensation” under Section 162(m) of the Code, provided that the performance criteria for such award or portion of such award is a measure based on one or more qualifying performance criteria selected by the administrator and specified at the time the award is granted. The administrator will certify the extent to which any qualifying performance criteria has been satisfied, and the amount payable as a result thereof, prior to payment, settlement or vesting of any award that is intended to satisfy the requirements for “performance-based compensation” under Section 162(m) of the Code. Notwithstanding satisfaction of any performance criteria, the number of shares issued under or the amount paid under an award may be reduced, but not increased, by the administrator on the basis of such further considerations as the administrator in its sole discretion may determine.

For purposes of the Plan, the term “qualifying performance criteria” means any one or more of the following performance criteria, or derivations of such performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the administrator: (a) earnings per share; (b) net earnings or net income (before or after taxes); (c) net sales or revenue; (d) net operating profit; (e) return measures (including return on assets, capital, invested capital, equity, sales or revenue); (f) cash flow (including operating cash flow, free cash flow, cash flow return on equity and cash flow return on investment); (g) earnings before or after interest, taxes, depreciation and/or amortization; (h) gross or operating margins; (i) productivity ratios; (j) revenue growth; (k) expenses; (l) margins; (m) operating efficiency; (n) customer satisfaction; (o) working capital; (p) market share; (q) share price (including growth measures, market capitalization, total stockholder return and return relative to market indices); and (r) economic value added or EVA (net operating profit after tax minus capital multiplied by the cost of capital).

To the extent consistent with Section 162(m) of the Code, the administrator may provide in an award intended to qualify as performance-based compensation that any evaluation of performance may include or exclude any of the following events that occurs during a performance period: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; (d) any reorganization and restructuring programs; (e) extraordinary, unusual and/or nonrecurring items of gain or loss; (f) acquisitions or divestitures; and (g) foreign exchange gains and losses.

Amendment and Termination

The Board may amend, alter, suspend or terminate the Plan and the administrator may, to the extent permitted by the Plan, amend the terms of any award granted under the Plan, including any award agreement, in each case, retroactively or prospectively; provided, however, that no such amendment, alteration, suspension, or termination of the Plan may be made which, without first obtaining stockholder approval as required by law or regulation or otherwise, would, except as provided in the Plan: (a) increase the maximum number of shares

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which may be sold or awarded under the Plan or increase the maximum limitations as set forth in the Plan; (b) decrease the minimum exercise price of outstanding options; (c) change the class of persons eligible to receive awards under the Plan; (d) change the performance measures specified in the Plan; (e) extend the duration of the Plan or the period during which options or stock appreciation rights may be exercised; or (f) otherwise require stockholder approval to comply with any applicable law, regulation or rule.

No amendment or alteration to the Plan or an award or award agreement may be made which would impair the rights of the holder of an award, without such holder’s consent, provided that no such consent is required if the administrator determines in its sole discretion and prior to the date of any change in control that such amendment or alteration either is required or advisable in order for the Company, the Plan or the award to satisfy any law or regulation or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard.

Adjustments

The number and kind of shares available for issuance under the Plan (including under any awards then outstanding), and the number and kind of shares subject to the individual limits set forth in the Plan and above, will be equitably adjusted by the administrator as it determines appropriate to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend or distribution of securities, property or cash (other than regular, quarterly cash dividends), or any other event or transaction that affects the number or kind of outstanding shares of the Company.

In the event there is any other change in the number or kind of outstanding shares, or any stock or other securities into which such shares shall have been changed, or for which it shall have been exchanged, by reason of a change of control, other merger, consolidation or otherwise, then immediately prior to the occurrence of such change of control, unless specified otherwise in an award agreement, any and all options, stock appreciation rights and other stock-based awards which are outstanding will accelerate and become fully exercisable. Immediately prior to any such change in control, unless specified otherwise in an award agreement, any restrictions, performance criteria or other conditions applicable to restricted stock units, shares of restricted stock and other stock-based awards previously awarded to participants will be immediately canceled or deemed achieved, and all such restrictions will lapse. Immediately prior to the change of control, all awards which are outstanding will immediately become fully vested and nonforfeitable. The administrator may, in its discretion, determine that an award can or cannot be exercised after, or will otherwise terminate or not terminate as of, a change in control.

Transferability

Awards generally may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated by a participant other than by will or the laws of descent and distribution, except as determined by the administrator and consistent with the terms of the Plan, and each ISO or stock appreciation right granted in connection with an ISO may be exercisable only by the participant during his or her lifetime. Notwithstanding the foregoing, to the extent permitted by the administrator, the person to whom an award is initially granted may make certain limited transfers to certain family members, family trusts, or family partnerships.

Effective Date and Termination of the Plan

On May 28, 2010, the Plan became effective upon its adoption by the Board and approval by the Company’s sole stockholder, The First American Corporation. The Plan will remain available for the grant of awards, subject to the right of the Board to amend or terminate the Plan, until the earlier of the date that all shares subject to the Plan have been delivered, and any restrictions on such shares have lapsed or the tenth (10th) anniversary of May 28, 2010.

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Federal Income Tax Treatment

The following discussion of the federal income tax consequences of the Plan is intended to be a summary of applicable federal law as currently in effect. It should not be taken as tax advice by Plan participants, who are urged to consult their individual tax advisors.

Stock Options

ISOs and NQSOs are treated differently for federal income tax purposes. ISOs are intended to comply with the requirements of Section 422 of the Code. NQSOs do not comply with such requirements.

An optionee is not taxed on the grant or exercise of an ISO. The difference between the exercise price and the fair market value of the shares on the exercise date will, however, be a preference item for purposes of the alternative minimum tax. If an optionee holds the shares acquired upon exercise of an ISO for at least two years following the option grant date and more than one year following exercise, the optionee’s gain, if any, upon a subsequent disposition of such shares is long term capital gain. The measure of the gain is the difference between the proceeds received on disposition and the optionee’s basis in the shares (which generally equals the exercise price). If an optionee disposes of stock acquired pursuant to exercise of an ISO before satisfying these holding periods, the optionee will recognize both ordinary income and capital gain in the year of disposition. The Company is not entitled to an income tax deduction on the grant or exercise of an ISO or on the optionee’s disposition of the shares after satisfying the holding period requirement described above. If the holding periods are not satisfied, the Company will be entitled to a deduction in the year the optionee disposes of the shares in an amount equal to the ordinary income recognized by the optionee.

In order for an option to qualify for ISO tax treatment, the grant of the option must satisfy various other conditions more fully described in the Code. The Company does not guarantee that any option will qualify for ISO tax treatment even if the option is intended to qualify for such treatment. In the event an option intended to be an ISO fails to so qualify, it will be taxed as an NQSO, as described in the paragraph below.

An optionee is not taxed on the grant of an NQSO. On exercise, the optionee recognizes ordinary income equal to the difference between the exercise price and the fair market value of the shares acquired on the date of exercise. The Company is entitled to an income tax deduction in the year of exercise in the amount recognized by the optionee as ordinary income. The optionee’s gain (or loss) on subsequent disposition of the shares is long term capital gain (or loss) if the shares are held for more than one year following exercise. The Company does not receive a deduction for this gain.

Stock Appreciation Rights

An optionee is not taxed on the grant of a stock appreciation right. On exercise, the optionee recognizes ordinary income equal to the cash or the fair market value of any shares received. The Company is entitled to an income tax deduction in the year of exercise in the amount recognized by the optionee as ordinary income.

Restricted Stock and Restricted Stock Units

Grantees of restricted stock or restricted stock units do not recognize income at the time of the grant. When the award vests or is paid, grantees generally recognize ordinary income in an amount equal to the fair market value of the stock or units at such time, and the Company will receive a corresponding deduction. However, no later than 30 days after a participant receives an award of restricted stock, the participant may elect to recognize taxable ordinary income in an amount equal to the fair market value of the shares at the time of receipt. Provided that the election is made in a timely manner, when the restrictions on the shares lapse, the participant will not recognize any additional income. If the participant forfeits the shares to the Company (e.g., upon the participant’s termination prior to vesting), the participant may not claim a deduction with respect to the income recognized as a

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result of the election. Dividends paid with respect to unvested shares of restricted stock generally will be taxable as ordinary income to the participant at the time the dividends are received.

Company Deduction and Section 162(m)

Section 162(m) generally allows the Company to obtain tax deductions without limit for performance-based compensation. The Plan is designed to permit the grant of options and stock appreciation rights, and certain awards of restricted stock, restricted stock units, performance units, performance shares and other stock-based awards that are intended to qualify as “performance-based compensation” not subject to Section 162(m)’s $1,000,000 deductibility cap. The rules and regulations promulgated under Section 162(m) are complicated and subject to change from time to time, sometimes with retroactive effect. In addition, a number of requirements must be met in order for particular compensation to so qualify. As such, there can be no assurance that any compensation awarded or paid under the Plan will be fully deductible under all circumstances.

New Plan Benefits

The benefits that will be awarded or paid in the future under the Plan are not currently determinable. Such awards are within the discretion of the Compensation Committee, and the Compensation Committee has not determined future awards or who might receive them. Information about awards granted in fiscal year 2016 under the Plan to the Company’s named executive officers can be found in the table under the heading “2016 Grants of Plan-Based Awards” on page 46 of this proxy statement. As of March 16, 2017, the closing price of a share of the Company’s common stock was $38.53.

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Item 5.    Ratification of Selection of Independent Auditor

The Audit Committee has selected PricewaterhouseCoopers LLP (“PwC”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2017. Representatives of PwC are expected to be present at the annual meeting, and, if they do attend the annual meeting, will have an opportunity to make a statement and be available to respond to appropriate questions.

Selection of our independent registered public accounting firm is not required to be submitted for stockholder approval, but the Audit Committee is seeking ratification of its selection of PwC from our stockholders as a matter of good corporate governance. If the stockholders do not ratify this selection, the Audit Committee will reconsider its selection of PwC and will either continue to retain this firm or appoint a new independent registered public accounting firm. Even if the selection is ratified, the Audit Committee may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our Company’s best interests and those of its stockholders.

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Security Ownership of Management

The following table sets forth the total number of our shares of common stock beneficially owned and the percentage of the outstanding shares so owned as of the record date by:

Unless otherwise indicated in the notes following the table, the stockholders listed in the table are the beneficial owners of the listed shares with sole voting and investment power (or, in the case of individual stockholders, shared power with such individual’s spouse) over the shares listed. Shares subject to rights exercisable within 60 days after the record date are treated as outstanding when determining the amount and percentage beneficially owned by a person or entity.

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The shares set forth in the table above include shares that the following individuals have the right to acquire within 60 days of the record date in the amounts set forth below:

Board and Committee Meetings

Our Board held five meetings during 2016. No incumbent director attended less than 75% of the meetings of the Board and the committees (if any) on which the director served. From time to time, our Board may act by unanimous written consent as permitted by the laws of the State of Delaware. Our Board’s standing committees include an audit, nominating and corporate governance, and compensation committee.

Audit Committee

Compensation   Committee

Nominating and   Corporate Governance Committee

Executive   Committee

Number of Meetings in 2016

7

6

3

1

Independent Directors

Dr. James L. Doti

Parker S. Kennedy

Margaret M. McCarthy

Michael D. McKee

Thomas V. McKernan

Mark Oman

Virginia M. Ueberroth

Inside Directors

Dennis J. Gilmore

		Chairperson				Member				Financial Expert

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Audit Committee

The members of the Audit Committee are Messrs. Doti (chair), McKernan and Oman. The functions performed by this committee include:

This committee’s charter is posted in the corporate governance section of our Web site at www.firstam.com. Our Board of Directors has determined that Messrs. Doti, McKernan and Oman are audit committee financial experts within the meaning of the SEC’s rules and regulations and that each member of the Audit Committee meets the requirement of independence established in the Securities Exchange Act of 1934, as amended, and the New York Stock Exchange listing standards.

Compensation Committee

The members of the Compensation Committee are Messrs. McKee (chair) and Oman. This committee establishes compensation rates and procedures with respect to our executive officers, including bonus awards, monitors our equity compensation plans and makes recommendations to the Board regarding director compensation. This committee’s charter is posted in the corporate governance section of our Web site at www.firstam.com.

Additional information concerning the Compensation Committee’s processes and procedures surrounding non-employee director compensation is included in the section entitled “2016 Director Compensation,” which begins on page 58. Additional information concerning the executive compensation policies and objectives established by the Compensation Committee, the Compensation Committee’s processes and procedures for consideration and determination of executive compensation, and the role of executive officers and the Compensation Committee’s compensation consultant in determining executive compensation is included in the section entitled “Compensation Discussion and Analysis,” which begins on page 26, under the subsection entitled “Role of the Compensation Committee” on pages 27 to 28.

Nominating and Corporate Governance Committee

The members of the Nominating and Corporate Governance Committee are Mses. McCarthy and Ueberroth (chair). This committee is responsible for identifying individuals qualified to become directors of our Company; recommending that the Board select the nominees identified by this committee for all directorships to be filled by the Board or by the stockholders; and developing, recommending to the Board and periodically reviewing the corporate governance principles applicable to our Company. This committee’s charter is posted in the corporate governance section of our Web site at www.firstam.com. The committee has adopted procedures by which certain stockholders of the Company may recommend director nominees to the Board. In particular, the

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committee has established a policy whereby it will accept and consider, in its discretion, director recommendations from any stockholder holding in excess of five percent of the Company’s outstanding shares of common stock. Such recommendations must include the name and credentials of the recommended nominee and should be submitted to the secretary of the Company at our address indicated on the first page of this proxy statement. The committee will evaluate director candidates recommended by stockholders for election to our Board in the same manner and using the same criteria as used for any other director candidate (as described below). If the committee determines that a stockholder-recommended candidate is suitable for membership on our Board, it will include the candidate in the pool of candidates to be considered for nomination upon the occurrence of the next vacancy on our Board or in connection with the next annual meeting of stockholders.

As stated in its charter, while the committee has no specific minimum qualifications in evaluating a director candidate, this committee takes into account all factors it considers appropriate in identifying and evaluating candidates for membership on our Board, including some or all of the following: strength of character, an inquiring and independent mind, practical wisdom, mature judgment, career specialization, relevant technical skills, reputation in the community, diversity and the extent to which the candidate would fill a present need on the Board. This committee makes recommendations to the full Board as to whether or not incumbent directors should stand for re-election. However, if our Company is legally required by contract or otherwise to provide third parties with the ability to nominate directors, the selection and nomination of such directors generally is not subject to the committee process for identifying and evaluating nominees for director. The committee conducts all necessary and appropriate inquiries into the background and qualifications of possible candidates and may engage a search firm to assist in identifying potential candidates for nomination.

The Company does not have a formal policy for the consideration of diversity in identifying nominees for director. However, the Nominating and Corporate Governance Committee recognizes the benefits associated with a diverse board and, as indicated above, considers diversity as a factor when identifying and evaluating candidates for membership on our Board. The committee utilizes a broad conception of diversity, including professional and educational background, prior experience on other boards of directors (both public and private), political and social perspectives as well as race, gender and national origin. Utilizing these factors, and the factors described above, the committee makes recommendations, as it deems appropriate, regarding the composition and size of the Board. The priorities and emphasis of this committee and of the Board may change from time to time to take into account changes in business and other trends and the portfolio of skills and experience of current and prospective Board members.

Our corporate governance guidelines also contain a mandatory retirement policy, which provides that no person is eligible for election as a director if on January 1 of the year of the election he or she is age 77 or older.

Independence of Directors

The Board has affirmatively determined that each member of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, as well as each other member of the Board, except Dennis J. Gilmore (who is not independent), is “independent” as that term is defined in the corporate governance rules of the New York Stock Exchange for listed companies, and that each member of the Audit Committee and the Compensation Committee is independent under the additional standards applicable to the respective committee. Anthony K. Anderson, who retired from the Board effective August 15, 2016, was also determined to be independent. In making these determinations, the Board considered the following relationships between directors and the Company: Mr. McKee and Ms. McCarthy are affiliated with, and Mr. Oman was previously affiliated with, entities that do business with or that represent clients that do business with the Company in the ordinary course from time to time; each of Messrs. Doti, Kennedy and McKernan and Ms. Ueberroth is or recently was affiliated with one or more nonprofit organizations to which the Company and/or its management has made donations from time to time; and Mr. Kennedy receives standard board fees for his service as a director of the Company’s trust subsidiary, as further described in the section entitled “2016 Director Compensation,” which begins on page 58. Each of the relationships above, while considered by the Board, falls within the Company’s categorical independence standards contained in the Board’s corporate governance guidelines, which are

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available on the corporate governance section of the Company’s Web site at www.firstam.com. The Board also considered the following relationships between Mr. Kennedy and the Company: he was employed by the Company as its executive chairman until his retirement in February 2012; for serving as chairman of the Board, he receives Company provided office space and secretarial assistance as set forth in the section entitled “2016 Director Compensation,” which begins on page 58; he may from time to time attend certain subsidiary board meetings as well as certain meetings with management; and his son is employed by a subsidiary of the Company as further described in the section entitled “Transactions with Management and Others” on page 24.

Board Leadership Structure; Meetings of Independent Directors

Our Board believes it is important to select the Company’s chairman and the Company’s chief executive officer in the manner it considers in the best interests of the Company at any given point in time. Accordingly, the chairman and chief executive officer positions may be filled by one individual or by two different individuals. Our Board has determined at this time that it is appropriate to separate the roles of chairman and chief executive officer and these positions are currently held by different individuals, Mr. Kennedy and Mr. Gilmore, respectively.

In addition to a chairman, we also have a lead independent director, currently Mr. Doti. The lead director is responsible for chairing and coordinating the agenda for the executive sessions of independent directors or, as applicable, the non-management directors, which are those directors who are not employees of the Company. In 2016 the independent directors met five times in executive session. In addition, the lead director is to provide advice to the chairman with respect to the following: (i) establishing an appropriate schedule for Board meetings; (ii) preparing agendas for the meetings of the Board and its committees; (iii) the retention of consultants who report directly to the Board; (iv) the Nominating and Corporate Governance Committee’s oversight and implementation of the Company’s corporate governance policies; and (v) the Compensation Committee’s oversight of the implementation of and compliance with the Company’s policies and procedures for evaluating and undertaking executive and incentive-based compensation.

Our Board believes this to be the most effective leadership structure for the Company at this time because it effectively allocates authority, responsibility, and oversight between management, the chairman of the Board and the lead director and capitalizes on the experience and strengths of our current management team. It does this by giving primary responsibility for the operational leadership and strategic direction of the Company to our chief executive officer, enabling the lead director to facilitate our Board’s independent oversight of management and consideration of key governance matters, and allowing our chairman to promote communication between management and our Board. The Board believes that its programs for overseeing risk, as described under the Risk Oversight section below, would be effective under a variety of leadership frameworks. Accordingly, the Board’s risk oversight function did not significantly impact its selection of the current leadership structure.

Risk Oversight

The Board’s responsibilities in overseeing the Company’s management and business to maximize long-term stockholder value include oversight of the Company’s key risks and management’s processes and controls to manage those risks appropriately. Management, in turn, is responsible for the day-to-day management of risk and implementation of appropriate risk management controls and procedures.

Although risk oversight permeates many elements of the work of the full Board and the committees, the Audit Committee has the most direct and systematic responsibility for overseeing risk management, and has been designated by the Board as its risk oversight committee. To that end, the Audit Committee charter provides for a variety of regular and recurring responsibilities relating to risk, including:

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In performing these functions, the committee regularly receives reports from management, including the Company’s enterprise risk management committee on which senior officers of the Company sit, and internal and external auditors regarding the Company’s enterprise risk management program, compliance program, investment portfolios, information security and business continuity programs, extraordinary claims and losses and noteworthy litigation.

Separately, the Compensation Committee oversees the Company’s compensation policies and practices and has assessed whether the Company’s compensation policies encourage excessive risk taking. The Compensation Committee has concluded that these policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. In arriving at that conclusion the Compensation Committee considered, among other factors, the Company’s review and approval processes surrounding certain compensatory arrangements; the metrics used to determine variable compensation, including the performance measures selected by the Compensation Committee and performance ranges associated with the metrics; the Compensation Committee’s oversight of inclusion or exclusion of extraordinary items in the financial results upon which certain compensatory arrangements are based; the inclusion of overall Company performance in the determination of divisional leader compensation; the portion of variable compensation paid in restricted stock units, which generally vest over four years; the extent to which qualitative judgments are involved in the compensatory arrangements; the amount of compensation paid as sales commissions, the number of people to whom such compensation is paid and the localized nature of the commission payments; controls, such as actuarial studies on claims, underwriting controls and quality checks that the Company employs; and the extent to which compensatory arrangements can be changed if circumstances evidence increased risk associated with such arrangements.

Director Attendance at Annual Meetings

Our directors are expected to attend the annual meetings of our stockholders. At last year’s annual meeting, each of the Company’s directors attended in person.

Stockholder and Interested Party Communications with Directors

Stockholders and other interested parties may communicate directly with members of the Board, including the chairman, lead director or any of the other non-management directors of the Company (individually or as a group) by writing to such director(s) at the business addresses provided under each director’s name in the corporate governance section of our Web site at www.firstam.com. Directors receiving such communications will respond as such directors deem appropriate, including the possibility of referring the matter to management of the Company, to the full Board or to an appropriate committee of the Board.

The Audit Committee has established procedures to receive, retain and address complaints regarding accounting, internal accounting controls or auditing matters, and for the submission by our employees of concerns regarding questionable accounting or auditing matters. Our 24-hour, toll-free hotline is available for the submission of such concerns or complaints at 1-800-589-3259. To the extent required by applicable law, individuals wishing to remain anonymous or to otherwise express their concerns or complaints confidentially are permitted to do so.

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Transactions with Management and Others

The Board of Directors has adopted a written policy regarding related party transactions, which generally prohibits transactions between the Company and/or its affiliates, on the one hand, and the Company’s directors, officers (or officers of affiliates), stockholders holding in excess of 5% of the Company’s common stock or any of their immediate family members, on the other hand, without prior approval. The approving body may be either the Board or the Nominating and Corporate Governance Committee, or, if the proposed transaction involves $1,000,000 or less and it is impractical to seek the approval of the Board or that committee, then the chairman of the Nominating and Corporate Governance Committee may review and pre-approve the transaction (or the chairman of the Audit Committee if the chairman of the Nominating and Corporate Governance Committee is a party to the transaction). The policy prohibits directors of the Company from entering into any transaction with the Company or any of its affiliates outside of the ordinary course of business, except for transactions previously approved and in effect on the date the policy took effect.

Certain transactions are excluded from the application of the policy and are, therefore, permitted without prior approval. For example, compensatory arrangements (including the arrangement noted in the next paragraph) for service as an officer or director of the Company are excluded from the policy, as are transactions between the Company and its affiliates (other than directors and officers). In cases where the potential transaction would involve the officer, director, large stockholder or any of their immediate family members only in an indirect fashion, the policy does not apply where such indirect interest results solely from ownership of less than 10% of, or being a director of, the entity entering into the transaction with the Company. In addition, arms-length ordinary course transactions involving annual payments of $100,000 or less are permitted without prior approval.

Mr. Kennedy’s son is employed by a subsidiary of the Company as a vice president. His combined annual base salary and incentive compensation bonus for 2016 was approximately $450,000. He received standard employee benefits and participated in the standard, performance-based incentive compensation program available to similarly-situated employees of his level and experience.

Executive Officers

The following provides information regarding the Company’s current executive officers:

All officers of the Company are appointed annually by the Board on the day of its election.

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Compensation Discussion and Analysis

The Compensation Committee (the “Committee”) believes the Company’s management team performed well in 2016. The Company’s performance improved over a strong 2015, with revenue growing 7.7% to $5.6 billion. Reflecting continued vigilance on expenses, income before income taxes grew 10.4% to $477.6 million and pre-tax margin was 8.57%, up 21 basis points over the prior year. Return on average total equity improved from 10.8% in 2015 to 11.9% in 2016. During the year, the Company terminated its legacy pension plan. While the Company expects the termination to result in significant annual savings in the future, it generated a significant loss during the year. In particular, the termination reduced pre-tax net income by $66.3 million, pre-tax margin by 118 basis points and return on average total equity by 130 basis points.

The Company continued to make significant strides toward achieving its long-term strategic goals. Though market share in its US title insurance business decreased slightly, during the year the Company completed a number of strategic acquisitions to grow and strengthen the Company’s core title and settlement business. The Company continued to invest in its database of real property records, which is now the most comprehensive database of its kind in the United States. The Company also continued its efforts to leverage these databases to increase operational efficiency, to more effectively manage risk in its title insurance business and to introduce new products to the market. Reflecting its commitment to drive return for its stockholders, during the year the Company increased its cash dividend by 36% from an annual rate of $1.00 to $1.36 per share and achieved a total stockholder return of 5.2%.

The named executive officers’ bonuses were paid out at 126% of target, reflecting the results of the two financial metrics utilized by the Committee: return on equity and pretax margin, adjusted (i) to exclude losses associated with the pension plan termination, and (ii) to include estimated losses associated with title plant asset write-offs pertaining to prior years as if they had been incurred in 2016. Because the decision to terminate the Company’s pension plan was made during the course of 2016, its impact was not included in the 2016 financial plan, which was the basis for determining the 2016 financial metrics. The Committee determined that management should not be penalized for the termination of the plan during 2016—which management and the Board believed to be optimal—rather than waiting until 2017 when the impact of the termination could have been fully reflected in the financial metrics. The Committee also determined that management bonuses should be lowered to account for title plant asset write-offs identified during 2016 even though they pertained to prior years and, accordingly, were not reflected in the Company’s 2016 financial results.

The annual incentive plan gives the Committee the discretion to further adjust the payout by up to 30 percentage points to account for factors that may impact the Company’s return on equity or pretax margin but were unanticipated or were investments intended to create long-term stockholder value. For 2016, the Committee determined that no such discretionary adjustment was warranted. The Committee also retains the ultimate ability to pay a lower amount, including the discretion not to pay a bonus.

As part of its process in determining executive compensation levels for 2016, the Committee has reviewed the results of last year’s Say on Pay proposal, in which approximately 96% of the Company’s shares present and entitled to vote approved 2015 executive compensation. The stockholder support for the prior Say on Pay proposal reinforces the Committee’s belief that it should continue its practice of implementing and overseeing executive compensation programs that provide for a substantial portion of the executive officers’ total compensation to be related to the Company’s consolidated financial performance. It also reinforces the Committee’s sense that, for executive officers, the mix of compensation should be weighted heavily toward at-risk pay, in particular, the annual incentive bonus, and should include a substantial portion of equity. This is consistent with the overall philosophy of maintaining a pay mix that results fundamentally in a pay-for-performance orientation and a strong alignment between the interests of executive officers and long-term stockholders.

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The Committee believes that the results of the 2016 executive compensation program, as disclosed and discussed herein, reflect its pay-for-performance philosophy. The results of the 2016 executive compensation program are also believed to have met the Company’s objective to develop and administer compensation programs that will continue to attract and retain executives critical to the Company’s long-term strategy and success, provide compensation levels that are competitive with title industry competitors and other peer group companies, motivate executives to enhance long-term stockholder value without taking excessive risk to achieve short term gains, and encourage the identification and implementation of best business practices.

Named Executive Officers

This discussion addresses the compensation programs applicable to the Company’s named executive officers, who currently hold (and held as of December 31, 2016) the following positions:

The Company’s executive officer compensation program, which is administered by the Committee, is designed to enhance stockholder value by providing that a substantial portion of the executive officer’s total compensation be related to the Company’s consolidated financial performance and a lesser portion to the Committee’s qualitative analysis of the contribution of each individual executive officer to the Company. The Company’s policy is designed to develop and administer programs that will:

The Committee is comprised of independent members of the Board of Directors. The Committee reviews and approves the base salaries of the executive officers of the Company, their annual incentive bonus programs, their long-term incentive compensation and other incentive and executive benefit plans. It also reviews and makes recommendations to the Board of Directors regarding director compensation. The Committee, in consultation with the independent compensation consultants that it retains, analyzes the reasonableness of the compensation paid to the executive officers. In discharging its functions, as described in more detail below, the Committee reviews compensation data from comparable companies and from relevant surveys, which it utilizes to assess the reasonableness of compensation for the Company’s executive officers.

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The Committee’s function is more fully described in its charter which is regularly reviewed, and has been approved, by the Company’s Board of Directors. The charter is available in the corporate governance section of the Company’s Web site at www.firstam.com.

The Company’s chief executive officer and, as appropriate, certain other executive officers may attend the portion of the Committee’s meetings where individual executive officer performance is discussed. Directors other than Committee members also may attend Committee meetings, including the portion where executive officer performance is discussed. While the Committee may meet with the Company’s chief executive officer to discuss his own compensation package and his recommendations with respect to the other executive officers, all ultimate decisions regarding executive compensation are made solely by the Committee, with input from its compensation consultant.

In making its determinations with respect to executive officer compensation, the Committee engages the services of Frederic W. Cook & Co., Inc. to assist with its review of the compensation package of the chief executive officer and other executive officers. In addition, the compensation consultant has assisted the Committee with related projects, such as evaluating non-employee director pay levels, advice with respect to the design of executive compensation programs, review of annual management incentive bonus plans, preparation or review of certain of the Company’s compensation-related disclosures and related tasks.

The Committee retains the compensation consultant directly, although in carrying out assignments, the compensation consultant also interacts with Company management to the extent necessary and appropriate. The compensation consultant performs no services for management, though at the direction of the Committee it does assist in the preparation or review of certain of the Company’s compensation-related disclosures, including this Compensation Disclosure and Analysis, and related projects. The Committee has assessed the independence of the consultant and has concluded that no conflict of interest exists that would prevent the consultant from serving as an independent consultant to the Committee.

The Company utilizes four main components of compensation:

(1) Base Salary

The Committee sets base salaries for executive officers based on the individual’s position within the Company and his current and sustained performance results. The Committee reviews executive officer base salaries each year and makes any adjustments it deems necessary based on, among other factors, the overall performance of the Company, new roles and/or responsibilities assumed by the executive officer, the general performance of the business units or departments over which the executive officer has responsibility, the significance of the executive

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officer’s impact on the achievement of the Company’s strategic goals, the executive officer’s length of service with the Company and the executive officer’s base salary relative to the base salaries of similar individuals in peer companies. The Committee gives no specific weighting to any one factor in setting the level of base salary and the process ultimately relies on the subjective exercise of the Committee’s judgment. Based on the Company’s peer group and relevant compensation survey data (discussed further below), the Committee also takes into account the factors described above, as well as the executive officer’s potential as a key contributor and amounts that may be required to recruit new executive officers.

Other than in the case of new hires or promotions, the Committee generally determines base salaries for executive officers around the beginning of each calendar year. As described below under VII.A. “Employment Agreements,” Messrs. Gilmore, DeGiorgio, Leavell and Seaton have employment agreements with the Company that specify their respective minimum base salaries. These minimum base salaries are indicated in the column entitled “Minimum Base Salary” in the table below. These amounts may be increased at the discretion of the Committee.

In January and February of 2016, the Committee reviewed executive officer compensation, including their base salaries. The Committee determined that, based on its assessment of relevant peer company and/or market data, particularly in light of the strong performance of both the executives and the Company, the base salaries should be adjusted. As a result, the Committee increased Mr. Gilmore’s base salary to $950,000; Mr. DeGiorgio’s to $750,000; Mr. Leavell’s to $700,000; Mr. Seaton’s to $575,000; and Mr. Wajner’s to $275,000.

In summary, the base salaries of the named executive officers as of December 31, 2015 and as of December 31, 2016, and the minimum base salary as required by their respective employment agreements are as follows:

In February of 2017, the Committee reviewed executive officer base salaries and determined that, based on relevant peer company and/or market data, and after taking into account the performance of the executives and the Company, the base salary of each of Mr. Seaton and Mr. Wajner warranted an adjustment. Consequently, the Committee increased Mr. Seaton’s base salary from $575,000 to $600,000 and Mr. Wajner’s from $275,000 to $290,000. The Committee determined that market conditions did not warrant an adjustment to the salaries of the other executive officers.

(2) Annual Cash Bonus

The Committee considers the annual cash bonus to be a critical component of the executive officer compensation program. The annual cash bonus is tied to the annual performance of the Company. In recent years the annual cash bonus, together with the Performance RSUs described below, have accounted for a substantial portion, if not the majority of the compensation paid to the named executive officers. This emphasis on annual incentive compensation, as opposed to fixed base salary and long-term equity incentive compensation, reflects the view that key components of the Company’s business operations are cyclical in nature. Accordingly, the Company believes that an incentive structure tied to annual performance is a more effective means of motivating and rewarding executive officers to enhance long-term stockholder value.

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As was the case in recent years, the Committee structured payouts under the 2016 cash bonus program to be based on measurable performance against specific financial targets which the Committee believes to be key drivers of stockholder value. Like 2015, financial targets collectively accounted for 100% of the cash bonus payout for 2016, with the resulting amount being subject to adjustment of up to 30 percentage points in the discretion of the Committee (the “Discretionary Adjustment”). The Discretionary Adjustment gives the Committee the ability to adjust the cash bonus payout for unanticipated external factors—such as regulatory changes or meaningful changes in interest rates—or success against strategic initiatives designed to create long-term stockholder value—such as technology projects, risk management efforts, employee engagement or market share gains/losses in key markets. The Committee also retains the ultimate ability to pay a lower amount, including the discretion not to pay a bonus.

As part of its review in early 2016, the Committee increased target cash bonus amounts as follows:

The increase in the target cash bonus amounts reflected the Committee’s evaluation of peer group compensation data and/or relevant market data. As with base salaries, the Committee determined that the target cash bonus amounts should be adjusted, particularly in light of the strong performance of both the executives and the Company.

The 2016 annual cash bonus payable to each executive officer was determined by adjusting the applicable portion of the target cash bonus amount (listed in the table below under the column entitled “Percentage of Target”) based on objective financial criteria in two areas (each listed in the table below under the column entitled “Metric”), with the result being subject to any Discretionary Adjustment as described above. Each financial metric had associated with it a threshold 50% payout level, a 100% payout level and a 175% payout level (listed in the table below under the columns entitled “Threshold”, “Target” and “Maximum”, respectively). With respect to both financial metrics (and subject to the Discretionary Adjustment), results below the threshold 50% payout level would not result in any payment and results above the maximum would not result in any additional payment. The percentage payout for results between the threshold and maximum were to be determined on a linear sliding scale basis between the two metric points on either side of the actual result (i.e., between the threshold and the target, or the target and the maximum, as applicable).

As in 2015, for 2016 the two financial metrics utilized by the Committee were:

The Committee set the target financial metric payout levels at the pretax margin and return on equity set forth in the Company’s financial plan, which was unanimously approved by the Company’s Board of Directors. The

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Committee believes these metrics, and the related performance levels, are indicators as to whether the Company, given the environment in which it is operating, has generated value for stockholders. The Committee also believes these metrics are utilized by stockholders, potential stockholders and their advisors in determining the value of the Company.

The target performance levels and actual performance for 2016 with respect to the financial metrics were as follows:

In determining the actual results for the financial metrics, the Committee exercised its discretion to exclude losses incurred during the year related to the termination of its legacy pension plan and to include certain estimated title plant asset write-offs from prior periods, as described below.

In May 2016, the Company terminated its pension plan effective as of July 31, 2016. At that time the Company expected to realize losses totaling approximately $212 million in connection with the termination, $197 million of which were already reflected as accumulated other comprehensive loss in the Company’s financial statements as of December 31, 2015. A loss of approximately $81 million was originally anticipated to be realized in 2016, with the remainder expected to be realized in 2017 upon completion of the termination process. The Company ultimately realized a loss of $66.3 million in 2016 (the “2016 Pension Termination Loss”). Once the termination process is complete, the Company estimates an annual reduction of approximately $22 million in personnel expenses related to the pension plan.

Because the 2016 Pension Termination Loss was non-operational in nature; was not anticipated at the time the Board approved the Company’s 2016 financial plan, which was the basis for the corresponding target financial metrics for the year; would result in a meaningful future benefit at the expense of short-term results; and was the result of capital allocation decisions made as a result of circumstances—such as uncertainty in future interest rates and investment returns—that are largely outside of management’s control, the Committee excluded this loss in determining the level of performance under the Company’s annual incentive plan. In the Committee’s view, management should not be penalized for the termination of the plan during 2016—which management and the Board believed to be optimal—rather than waiting until 2017 when the impact of the termination could have been fully reflected in the financial metrics.

In addition, the Committee elected to adjust the metric results to include $16.3 million in estimated title plant asset write-offs from prior periods that were identified during 2016. While the actual write-offs were less than the originally-estimated write-offs and were not reflected in the Company’s 2016 financial results, the Committee

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determined that it was appropriate to reduce the pretax margin and return on equity results as if the estimated write-offs had been reflected in the 2016 financial results.

In considering whether a Discretionary Adjustment should be made to the cash bonus, the Committee took into account notable achievements, as well as challenges, towards creating value for long-term stockholders, including expense management as reflected by better-than-targeted achievement against efficiency metrics; strong pretax margin results in the Company’s title insurance and services segment; execution against the Company’s commitment to drive return for its stockholders, as reflected in the Company’s notable total stockholder return relative to industry peers (though recognizing underperformance relative to the broader market in 2016) and 31% increase in the Company’s cash dividend; the slight decrease in the Company’s United States title business market share; the assembly of the largest real property database in the United States; the effectiveness of the Company’s risk management efforts; completion of a number of acquisitions that support the Company’s strategy of growth in its core title and settlement business; leveraging of the Company’s data assets to increase operational efficiency, to more effectively manage risk in its title insurance business and to introduce new products to the market; and successful employee engagement efforts, as reflected in the Company’s inclusion on the Fortune 100 Best Companies to Work For list.

Each named executive officer’s cash bonus for 2016 was determined by adjusting the target cash bonus amount based on the level of achievement of the financial metrics. The following table summarizes the computation of the 2016 annual cash bonuses for each named executive officer. It also provides the cash bonus amount for 2015 for comparison purposes. The amounts in the table below are reflected in the 2016 Summary Compensation Table under the column entitled “Non-Equity Incentive Plan Compensation.”

For 2016 cash bonuses, the Committee continued its practice of utilizing a performance unit arrangement for named executive officers intended to enable the Company to deduct for tax purposes under Section 162(m) of the Internal Revenue Code the entire amount of the cash bonus awarded for 2016 performance. The arrangement involves the granting of performance units under the Company’s incentive compensation plan in an amount approximating the maximum amount of the cash bonus, followed by a reduction of the amount of performance units to eliminate the excess units when the actual cash bonus has been determined. The remaining units are then converted into dollars and paid in cash in the bonus amount determined by the Committee. These performance units would not be payable unless the 2016 net income of the Company was at least $25 million. For purposes of this calculation, net income excludes (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary, unusual and/or nonrecurring items of gain or loss and (f) foreign exchange gains and losses (“Extraordinary Items”). The Committee determined that this target was met for 2016, with the result that the named executive officers ultimately received performance units for 2016, which the Committee subsequently converted into cash in the amount shown in the preceding table in the column labeled “2016 Actual Cash Bonus Amount.”

In February 2017, the Committee determined target cash bonus amounts for 2017. The Committee determined that Mr. Gilmore’s target cash bonus amount would increase from $1,395,000 to $1,620,000; Mr. DeGiorgio’s

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target cash bonus amount would remain at $700,000; Mr. Leavell’s target cash bonus amount would remain at $650,000; Mr. Seaton’s target cash bonus amount would increase from $500,000 to $575,000; and Mr. Wajner’s target cash bonus amount would increase from $124,000 to $131,250. The increases reflected the Committee’s determination, based on its assessment of relevant peer company and/or market data, and after taking into account the performance of the executives and the Company, that the target cash bonus amounts of Mr. Gilmore, Mr. Seaton and Mr. Wajner warranted an adjustment.

Subject to the Committee’s ability to award a lower amount, including the ability to not award any bonus, for 2017 the cash bonuses of the executive officers will again be determined based on the Company’s return on equity (weighted 50%) and pretax margin (weighted 50%). As was the case in 2016, actual performance could result in payouts ranging from 50% to 175% of target, or 0% if performance is below threshold levels.

For 2017, as was the case with respect to 2016, non-metric factors can result in a Discretionary Adjustment that can modify the cash bonus payout by up to +/- 30 percentage points.

The target cash bonus amount will be adjusted in the same manner as in 2016, in that results below the threshold 50% payout level do not result in any payment and results above the maximum do not result in any additional payment. The percentage payout for results between the threshold and maximum are determined on a linear sliding scale basis between the two metric points on either side of the actual result (i.e., between the threshold and the target, or the target and the maximum, as applicable).

The Committee believes that retaining the two primary financial metrics utilized in the past, coupled with evaluation of a potential Discretionary Adjustment based on internal or external factors as described above, advances the objective of the Company’s annual cash bonus program and properly balances the importance of (i) compensating based on objective short-term financial results that are important to investors, and (ii) retaining the ability to take into account the Committee’s subjective determination with respect to long-term value creation and overall performance.

For 2017, the Committee again established a performance unit arrangement for the named executive officers. The Committee granted to the named executive officers performance units with a maximum cash value approximately equal to the maximum potential amount of the 2017 annual cash bonus using the metrics described above (including the potential Discretionary Adjustment of up to 30 percentage points). This resulted in performance unit awards of $3,321,000, $1,435,000, $1,332,500, $1,178,750 and $269,063, respectively, to Messrs. Gilmore, DeGiorgio, Leavell, Seaton and Wajner. These performance units, which were issued under the Company’s 2010 Incentive Compensation Plan, provide that they will not be payable unless the net income of the Company for 2017 is at least $25 million, excluding Extraordinary Items. As in 2016, the award agreements give the Committee complete discretion to reduce the actual amount of bonus payable to any lesser amount. It is expected that such a reduction will be made when the Committee determines the actual 2017 cash bonuses and that the performance units will be utilized to pay such amounts.

(3) Annual Equity Bonus

As with the annual cash bonus, the Committee considers the annual equity bonus, which is paid in the form of RSUs tied to the annual performance of the Company (“Performance RSUs”), to be a critical component of the executive officer compensation program. The annual equity bonuses, together with the annual cash bonuses, have accounted for a substantial portion, if not the majority of the compensation paid to the named executive officers. Similar to the annual cash bonus, the Company’s practice of granting Performance RSUs reflects the view that key components of the Company’s business operations are cyclical in nature. However, because these Performance RSUs vest over a four-year period, this practice also discourages executive officers from taking excessive risks for short-term gains. Taken together, the Company believes that this incentive structure tied to annual performance is an effective means of motivating and rewarding executive officers to enhance long-term stockholder value.

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As in prior years, the Committee structured payouts of 2016 Performance RSUs to be based on measurable performance against specific financial targets which the Committee believes to be key drivers of stockholder value. Performance RSUs granted for 2016 performance were based on the same financial targets as the 2016 annual cash bonus and subject to a Discretionary Adjustment.

For 2016, the Committee increased the target Performance RSU amounts as follows:

The increase in the target Performance RSU amounts reflected the Committee’s evaluation of peer group compensation data and/or relevant market data. As with the base salaries and target cash bonuses, the Committee determined that the target Performance RSU amounts should be adjusted, particularly in light of the strong performance of both the executives and the Company.

Like the 2016 annual cash bonuses, the amount of 2016 Performance RSUs awarded to each executive officer was determined by adjusting the applicable portion of the target Performance RSU amount (listed in the table below under the column entitled “Percentage of Target”) based on objective financial criteria in two areas (each listed in the table below under the column entitled “Metric”), with the result being subject to a Discretionary Adjustment. Each financial metric had associated with it a threshold 50% payout level, a 100% payout level and a 175% payout level (listed in the table below under the columns entitled “Threshold”, “Target” and “Maximum”, respectively). With respect to both financial metrics (and subject to the Discretionary Adjustment), results below the threshold 50% payout level would not result in any payment and results above the maximum would not result in any additional payment. The percentage payout for results between the threshold and maximum were to be determined on a linear sliding scale basis between the two metric points on either side of the actual result (i.e., between the threshold and the target, or the target and the maximum, as applicable).

For 2016 Performance RSUs, the Committee utilized the same two financial metrics utilized for the 2016 cash bonus program (i.e., pretax margin and return on equity) and the same threshold payout levels of 50%, 100% and 175% (listed in the table below under the columns entitled “Threshold”, “Target” and “Maximum”, respectively), with target financial metric payout levels set at the pretax margin and return on equity set forth in the Company’s budget.

The target performance levels and actual performance for 2016 with respect to the financial metrics were as follows:

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The amount of 2016 Performance RSUs awarded to each executive officer was determined by adjusting the target Performance RSU amount based on the level of achievement of the financial metrics, or 126% of target. As with the annual cash bonus, the Committee determined that no Discretionary Adjustment was warranted. The following table summarizes the computation of the 2016 Performance RSU amount for each named executive officer. It also provides the Performance RSU amount for 2015 for comparison purposes.

RSUs are denominated in units of the Company’s common stock. In accordance with Company policy, the number of units granted to a named executive officer in 2017 for 2016 performance was determined by dividing the dollar amount of the Performance RSUs that the Committee determined to be granted by the closing price of the Company’s stock on February 22, 2017, the second day on which the New York Stock Exchange was open for trading following the filing of the Company’s Annual Report on Form 10-K. These shares are not actually issued to the recipient on the grant date. Instead, when an RSU vests, the recipient is entitled to receive the shares. Dividends paid on the Company’s common stock are treated as if they were paid at the same time with respect to the RSUs and immediately reinvested in additional RSUs having the same vesting requirements as the RSUs initially granted.

The Performance RSUs awarded to named executive officers vest at a rate of 25% on each anniversary of the date of grant. Vesting accelerates in certain circumstances, including upon the death or disability of the recipient and upon the one-year anniversary of the early retirement or normal retirement of the recipient or the date on which the recipient is terminated by the Company without cause. Early retirement means the termination of the recipient’s employment, other than for cause, after having reached age 55 and 10 years of service. Normal retirement means the termination of the recipient’s employment, other than for cause, after having reached age 62, irrespective of the number of years of service. It is a condition of early vesting in the event of disability, termination by the Company without cause or retirement that the recipient sign a separation agreement in a form satisfactory to the Company. A holder of RSUs has none of the rights of a stockholder unless and until shares are actually delivered to the holder.

The Performance RSUs issued in 2016 and 2017 to the Company’s named executive officers, based on the level of achievement in 2015 and 2016, respectively, provided that, except in the case of death, disability or certain change-in-control scenarios, none of the Performance RSUs would vest unless certain performance criteria were met. In particular, as with the annual cash bonuses, Performance RSUs would not vest unless the net income of

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the Company in the year of grant was at least $25 million, excluding Extraordinary Items. This condition on vesting is intended to qualify the Performance RSUs as performance-based compensation under Section 162(m) of the Internal Revenue Code, although there can be no guarantee that the Performance RSUs will so qualify.

It should be noted that as required by applicable rules, the 2016 Summary Compensation, 2016 Grants of Plan-Based Awards and Outstanding Equity Awards at 2016 Fiscal Year End tables in this proxy statement reflect Performance RSUs issued to the named executive officers in 2016 for performance in 2015. Similarly, the Performance RSUs issued in 2017 for performance in 2016 are not reflected in those tables contained in this proxy statement. Applicable rules require that these tables only reflect equity awards issued to the named executive officers in 2016.

In February 2017, the Committee determined target Performance RSU amounts for 2017. The Committee determined that Mr. Gilmore’s target Performance RSU amount would increase from $1,705,000 to $1,980,000; Mr. DeGiorgio’s target Performance RSU amount would remain at $700,000; Mr. Leavell’s target Performance RSU amount would remain at $650,000; Mr. Seaton’s target Performance RSU amount would increase from $500,000 to $575,000; and Mr. Wajner’s target Performance RSU amount would increase from $41,000 to $43,750. As with the target cash bonuses, the increases reflected the Committee’s determination, based on its assessment of relevant peer company and/or market data, and after taking into account the performance of the executives and the Company, that the target Performance RSU amounts of Mr. Gilmore, Mr. Seaton and Mr. Wajner warranted an adjustment.

Subject to the Committee’s ability to award a lower amount, including the ability to not award any Performance RSUs, for 2017 the Performance RSU amounts for the executive officers are again expected to be determined based on the Company’s return on equity (weighted 50%) and pretax margin (weighted 50%). As was the case for 2016, actual performance could result in payouts ranging from 50% to 175% of target, or 0% if performance is below threshold levels. For 2017, as was the case with respect to 2016, non-metric factors can result in a Discretionary Adjustment that can modify the amount by up to +/- 30 percentage points.

The target Performance RSU amount will be adjusted in the same manner as in 2016, in that results below the threshold 50% payout level do not result in any payment and results above the maximum do not result in any additional payment. The percentage payout for results between the threshold and maximum are determined on a linear sliding scale basis between the two metric points on either side of the actual result (i.e., between the threshold and the target, or the target and the maximum, as applicable).

(4) Long-Term Equity Incentive

The Committee has continued its practice of providing long-term incentives to its executive officers through the issuance of RSUs. For 2017, the Committee again evaluated alternative forms of long-term incentive compensation. The Committee continues to believe that RSUs effectively align the interests of executive officers with those of its long-term stockholders. The Committee believes that long-term incentive awards in the form of RSUs, particularly when coupled with the Performance RSUs, incentivizes executive officers to have a long-term perspective on the Company’s performance and, at the same time, discourages them from taking excessive risk to achieve short term gains. RSUs issued as part of the Company’s long-term incentive program will sometimes be referred to as “Long-Term Incentive RSUs,” to distinguish them from the previously described Performance RSUs awarded to the named executive officers primarily on the basis of the annual performance of the Company.

In determining the amount of Long-Term Incentive RSUs to grant to executive officers, the Committee reviews the performance of the executive officers following the completion of the year and the results of the other pay elements, together with market compensation data, among other factors, and awards the amount of Long-Term Incentive RSUs that it deems appropriate.

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In connection with 2016 performance, the Committee awarded $2,200,000, $1,050,000, $1,000,000, $750,000, and $125,000 of Long-Term Incentive RSUs to Messrs. Gilmore, DeGiorgio, Leavell, Seaton and Wajner, respectively. The Committee’s determination of the amount to be awarded to Mr. Gilmore reflected its conclusion that he, as chief executive officer, is ultimately responsible for the steps that have been taken to improve the Company’s operational efficiency and to advance its strategic goals, including effective management of enterprise risk, expense control, identifying and executing on strategic acquisition opportunities, expanding and leveraging data, and developing the Company’s employees. All of these steps, it believes, continue to significantly enhance the current earnings and the earnings potential of the Company, as well as the Company’s total stockholder return. With respect to the other named executive officers, the Committee’s determination took into account the recommendations of Mr. Gilmore, peer group and market data and a review of the accomplishments in various aspects of the Company’s operations that occurred during the year.

The terms and conditions of Long-Term Incentive RSUs are identical to the Performance RSUs issued to the named executive officers except that vesting does not accelerate upon early retirement or termination by the Company without cause.

The approximate dollar values of the Long-Term Incentive RSUs issued to each of the named executive officer recipients of such awards for 2016 performance are provided in the following table, together with the comparable amount for 2015 performance:

As indicated above with respect to Performance RSUs, it should be noted that, as required by applicable rules, Long-Term Incentive RSUs granted in 2017 in connection with 2016 performance are not reflected in the 2016 Summary Compensation table, the 2016 Grants of Plan-Based Awards table or the Outstanding Equity Awards at 2016 Fiscal Year End table contained herein. Those tables reflect Long-Term Incentive RSUs granted in 2016 in connection with 2015 performance.

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Summary of Base Salary, Cash Bonus, and Equity Incentive Compensation Paid for 2016. The following table summarizes for each named executive officer the amount paid for 2016 in the form of total base salary, cash bonus (paid in 2017 for 2016 performance), Performance RSUs (granted in 2017 for 2016 performance) and Long-Term Incentive RSUs (granted in 2017 in connection with 2016 performance). This table is not a substitute for the compensation tables required by the Securities and Exchange Commission and included under the heading “Executive Compensation Tables” herein, but it provides a more accurate picture of how the Committee viewed its compensation actions for the named executive officers based on performance for 2016:

(5) Other Executive Officer Benefits

Executive officers are entitled to employee benefits generally available to all full-time employees of the Company (subject to fulfilling any minimum service requirement), including elements such as the health and welfare benefits. The executive officers also receive an incremental disability insurance benefit that is not available to all employees. In designing these elements the Company seeks to provide an overall level of benefits that is competitive with the level of benefits offered by similar companies in the markets in which it operates.

Named executive officers may participate in several benefit plans that provide benefits upon retirement. Such retirement benefits include: the First American Financial Corporation 401(k) Savings Plan, the First American Financial Corporation Pension Plan (pending completion of its termination) (the “Pension Plan”), the Executive Supplemental Benefit Plan (the “SERP”) and the First American Financial Corporation Deferred Compensation Plan. The first two plans are generally available to employees (except that the Pension Plan is limited to individuals who became participants before 2002), while the remaining two plans are limited to a select group of management. The First American Financial Corporation 401(k) Savings Plan is a tax-qualified profit-sharing plan, which authorizes company matching contributions based on the amount of employee pretax contributions and a schedule that ties the amount of matching contributions to the Company’s profitability. For 2016, for each $1.00 employees contributed to the plan up to 3% of the employee’s eligible compensation, the Company provided a match of $1.25. Further explanation of the other three plans can be found in connection with the 2016 Pension Benefits and 2016 Nonqualified Deferred Compensation tables in the “Executive Compensation Tables” section. The Company believes that these plans provide a valuable recruiting and retention mechanism for its executive officers and enable it to compete more successfully for qualified executive talent.

The Committee utilizes the particular elements of compensation described above because it believes that they represent a well-proportioned mix of stock-based compensation, retention value and at-risk compensation which produces short-term and long-term performance incentives and rewards. By following this portfolio approach, the Committee endeavors to provide each named executive officer with a measure of security with respect to the minimum level of compensation he is entitled to receive, while motivating each named executive officer to focus on the business metrics that will produce a high level of performance for the Company with corresponding increases in stockholder value and long-term wealth creation for the named executive officer, as well as reducing the risk of loss of top executive talent to competitors.

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For named executive officers, the mix of compensation is weighted heavily toward at-risk pay and, in particular, the annual incentive bonus. This is consistent with the overall philosophy of maintaining a pay mix that results fundamentally in a pay-for-performance orientation for the Company’s executive officers.

Overall compensation levels for named executive officers are determined based on a number of factors, including each individual’s roles and responsibilities within the Company, each individual’s experience and expertise, the compensation levels for peers within the Company, compensation levels in the marketplace for similar positions and performance of the individual and the Company as a whole. In determining these compensation levels, the Committee considers all forms of compensation and benefits.

In order to determine competitive compensation practices, the Committee primarily relies upon data compiled from public filings of selected companies (“comparator companies”) that it considers appropriate comparators for the purpose of developing executive compensation benchmarks. The comparator companies for 2016 (meaning the companies used in connection with determinations of 2016 salaries, target cash bonuses for 2016, target Performance RSUs for the annual equity bonus and Long-Term Incentive RSUs issued as long-term equity incentive in connection with 2016 performance) are identified below. In addition, the Committee periodically considers nationally recognized survey data published by various consulting firms. Proxy data was used exclusively to develop benchmarks for the executive officers except for Mr. Wajner, for whom proxy data was lacking. For Mr. Wajner, the Committee utilized survey data from the US Mercer Benchmark Database for companies with revenue between $2.5 billion and $10 billion.

To assist it in determining the amount and mix of 2016 compensation commensurate with each named executive officer’s role, the Committee examined a group of companies with characteristics similar to the Company, including, in some cases, the business lines in which they operate as well as financial measures and other metrics such as market capitalization, revenues and employee counts.

The comparator companies for 2016 were:

These companies are the same as those utilized by the Committee with respect to 2015 and 2016 executive compensation decisions and the same group of companies was used for the purposes of 2017 executive compensation decisions. The peer companies represent the Committee’s continuing efforts to identify a significant number of comparable companies notwithstanding the fact that there is only one other company in the Company’s primary industry with financial and operational characteristics similar to the Company’s.

After consideration of the data collected on competitive compensation levels and relative compensation within the executive officer group, the Committee determines each individual executive officer’s target total compensation or total compensation opportunities based on Company and individual performance and the need to attract, incentivize and retain an experienced and effective management team. The Committee examines the relationship of each executive officer’s base salary, target annual incentive bonus opportunity and potential long-term incentive awards (if such an amount has been determined) to market data at the 25^th, 50^th, and 75^th percentiles. The Committee does not believe, however, that compensation or compensation opportunities should be structured toward a uniform relationship to any specific percentile of the market data, especially in light of the

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different financial characteristics of the Company’s business units (such as the relationship of revenues to net income). Accordingly, total compensation for specific individuals will vary based on a number of factors in addition to Company and individual performance, including scope of duties, tenure, institutional knowledge and/or difficulty in recruiting a replacement executive officer.

The final level and mix of compensation determined by the Committee is considered within the context of both the objective data from a competitive assessment of compensation and performance, as well as discussion of the subjective factors as outlined above. The Committee believes that each of the compensation packages for the named executive officers is within the competitive range of practices when compared to the objective comparative data even where qualitative factors have influenced the compensation decisions.

The Company’s general policy with respect to equity awards to executive officers is, after Committee approval, to issue the awards on the second day on which the New York Stock Exchange is open for trading following the filing of the Company’s Annual Report on Form 10-K. In the case of RSUs denominated in dollars and stock options, pricing (that is, the number of shares or units issued for each dollar denominated RSU award or the strike price with respect to stock options) is determined as of that date. The price of Company common stock used for these purposes is the last sale price reported for a share of the Company’s common stock on the New York Stock Exchange on that date.

The Company has adopted a clawback policy applicable to all executive officers. The policy generally provides for the return by the responsible executive officer(s) of compensation, including equity awards, received during the three full fiscal years prior to the announcement of a restatement of financial information to the extent such compensation would not have been received under the restated results. In addition, under Section 304 of the Sarbanes-Oxley Act of 2002, if the Company is required to restate its financial statements due to material noncompliance with any financial reporting requirements as a result of misconduct, the chief executive officer and chief financial officer may be required to reimburse the Company for any bonus or other incentive-based or equity-based compensation received during the 12 months following the first public issuance of the non-complying document and any profits realized from the sale of securities of the Company during that twelve-month period.