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 (Amendment No.    )

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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)

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2022 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT First American Financial Corporation

2020 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT FIRST AMERICAN First American Financial Corporation

April 1, 2022

Dear Fellow Stockholder,

You are cordially invited to attend our annual meeting of stockholders at 1:00 PM Pacific time, on May 10, 2022. This year’s annual meeting of stockholders will be held in a virtual-only meeting format online via live webcast using a unique link to be provided by email after registering at register.proxypush.com/FAF.

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 2021 annual report. More information regarding how to vote, participate in, and submit questions for the annual meeting can be found in 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 participating in the virtual annual meeting on May 10, 2022, we hope you will vote as soon as possible.

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

This year’s meeting will be held in a virtual-only meeting format online via live webcast. To participate in the meeting, stockholders must go to register.proxypush.com/FAF with the control number provided on their proxy card or voting instruction form and register by following the instructions. Upon completing registration, a stockholder will receive further instructions via email, including a unique link that will allow that stockholder access to the meeting. During the meeting, stockholders may vote, submit questions and view the list of stockholders as of the record date. For additional information on voting at or participating in the meeting online, including how to submit questions, please see “Questions and Answers” on page 74.

How to vote your shares before the meeting

Your vote is very important. Please submit your vote by proxy as soon as possible via the Internet, telephone or mail.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 10, 2022:  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.

Meeting Contingencies

In the event of a technical malfunction or other situation that the meeting chair determines may affect the ability of the meeting to satisfy the requirements for a meeting of stockholders to be held by means of remote communication under the Delaware General Corporation Law, or that otherwise makes it advisable to adjourn the meeting, the chair of the meeting will convene the meeting at 2:00 PM Pacific Time on the date specified above and at our address, 1 First American Way, Santa Ana, CA 92707, solely for the purpose of adjourning the meeting to reconvene at a date, time and physical or virtual location announced by the meeting chair. Under either of the foregoing circumstances, we will post information regarding the announcement on the Investors page of our website at investors.firstam.com.

Greg L. Smith

Vice President, Deputy General Counsel and Secretary

Santa Ana, California

April 1, 2022

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First American Financial Corporation

PROXY STATEMENT

Solicitation of Proxies by the Board of Directors

The board of directors (our “Board”) of First American Financial Corporation, a Delaware corporation (our “Company,” “we” or equivalent terms), is soliciting proxies from holders of our common stock for use at the annual meeting of our stockholders to be held on May 10, 2022, at 1:00 PM Pacific time. The meeting will be held in a virtual-only meeting format online via live webcast using a unique link to be provided by email after registering at register.proxypush.com/FAF. We have included information on how to vote, submit questions, and participate in the virtual meeting in the “Questions and Answers” section on pages 75 and 77.

We are mailing this proxy statement and the enclosed proxy card, notice of annual meeting, stockholders letter and 2021 annual report to our stockholders on or about April 1, 2022. 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 five sections. You should read all five sections before you vote.

The Compensation Discussion and Analysis section contains certain financial measures that are not presented in accordance with generally accepted accounting principles (“GAAP”), including adjusted return on average total equity and adjusted pretax margin. Please see Appendix A for the rationale behind the presentation of these measures and a reconciliation of these amounts to the nearest GAAP financial measures.

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Information Regarding the Nominees for Election

The following list provides information with respect to the three persons nominated and recommended to be elected as a Class III director by our Board, to serve for a three-year term expiring on the date of the 2025 annual meeting of stockholders. Each of the nominees is currently serving as a director of our Company and was previously elected by stockholders at the 2019 annual meeting of stockholders.

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Information Regarding the Other Incumbent Directors

The following lists provide information with respect to the individuals currently serving as Class I directors, whose current term expires at the 2023 annual meeting of stockholders, and Class II directors, whose term expires in 2024. The Class I directors were previously elected by stockholders at the 2020 annual meeting (other than Mr. DeGiorgio who was appointed in 2022), and the Class II directors were previously elected by stockholders at the 2021 annual meeting.

Class I Directors—Term Expiring 2023

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Class II Directors—Term Expiring 2024

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See the section entitled “Security Ownership of Management,” which begins on page 17, for information pertaining to stock ownership of our directors. There are no family relationships among any of the directors or nominees or any of our executive officers. 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.

The following chart displays information about the skills and experience of our directors. Most of our directors at least have exposure in each of these areas and many are proficient, but the chart below reflects only those that have self-reported as being from experienced to highly experienced in these areas.

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Item 1.    Election of Class III Directors

Our certificate of incorporation provides for a classified Board. Each person elected as a Class III director at the annual meeting of stockholders will serve for a three-year term expiring on the date of the 2025 annual meeting and until his or her successor in office is elected and qualified. Our Board has nominated the following individuals for election as Class III directors:

Reginald H. Gilyard

Parker S. Kennedy

Mark C. Oman

Unless otherwise specified by you in your proxy card, the proxies solicited by our Board will be voted “FOR” the election of each of the Class III 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 Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 2022 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 2021, the Compensation Committee has reviewed the results of last year’s Say on Pay proposal, in which approximately 68 percent of our Company’s shares present and entitled to vote approved 2020 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 officers’ total compensation to be related to our Company’s consolidated financial performance. It also reinforces the Compensation Committee’s view that, for executive officers, the mix of compensation should be weighted heavily toward at-risk pay and should include a substantial portion payable in 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.

To ensure that our compensation program aligns with the long-term interests of our stockholders, we engaged with our stockholders to seek feedback on our executive compensation program. We reached out to stockholders representing approximately 67 percent of our outstanding shares. Holders of approximately 58 percent of our outstanding shares responded to our outreach and approximately 49 percent chose to actively engage with us. Following a thorough review of our executive compensation program and incorporating feedback received from our stockholders, the Compensation Committee made several important changes to our compensation program, including the shift of 25 percent of long-term incentive awards for executive officers to multi-year performance awards based on total stockholder return relative to the S&P MidCap 400® Index over a three-year period. With these changes, our compensation program places an even greater emphasis on objective performance metrics that we believe will drive long-term stockholder value. For example, 62 percent of all restricted stock units (“RSUs”) awarded in 2022 (in connection with 2021 performance) to our chief executive officer (who is now our chairman) were metric-based, and 59 percent, on average, of RSUs granted to our other named executive officers were metric-based, up from 44 percent and 36 percent, respectively, for the prior year.

The results of the 2021 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 Summary Compensation Table and related compensation tables and narrative, appearing on pages 56 through 66, 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 our Company’s compensation programs. We expect to include a Say on Pay proposal in our proxy materials on an annual basis and, thus, we expect that the next Say on Pay proposal will occur at our 2023 annual meeting.

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Item 3.    Approval of Amendment and Restatement of the 2010 Employee Stock Purchase Plan

On March 9, 2022, the Board adopted and approved the First American Financial Corporation 2010 Employee Stock Purchase Plan, As Amended and Restated effective July 1, 2022 (the “Amended ESPP”), subject to stockholder approval, as an amendment and restatement of the First American Financial Corporation 2010 Employee Stock Purchase Plan, As Amended and Restated effective July 1, 2013 (the “ESPP”). The Board is submitting the Amended ESPP to stockholders for adoption and approval at the 2022 annual meeting. The purpose of the Amended ESPP is to provide an opportunity for employees of our Company (and any participating subsidiaries) to purchase common stock of our Company at a discount through accumulated payroll deductions. The Amended ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). However, sub-plans that do not meet the requirements of Section 423 of the Code may be established for the benefit of eligible employees of non-U.S. subsidiaries of our Company.

Summary of the Amended ESPP

The following is a summary of the principal features of the Amended ESPP. The following summary does not purport to be a complete description of all provisions of the Amended ESPP and is qualified in its entirety by the complete text of the Amended ESPP, which is attached to this proxy statement as Appendix B.

The Amended ESPP increases the maximum number of shares of Company common stock that will be made available for sale from 5,000,000 to 14,000,000. As of the record date, March 17, 2022, 576,364 shares remained available for issuance under the ESPP, which, together with the additional 9,000,000 shares, represents 8.8% of our common stock outstanding as of the record date. Additionally, the Amended ESPP extends the term from July 1, 2023 to July 1, 2032. Stockholder approval is required for each of these amendments. The Board believes that the Amended ESPP will encourage additional employee stock ownership and thereby better align the interests of employees with long-term stockholders. Stockholders are urged to read the Amended ESPP in its entirety.

Administration

An administrative benefits plan committee consisting of Company employees (the “Administrative Plan Committee”) administers the Amended ESPP. The Administrative Plan Committee has full discretionary authority to construe, interpret and apply the terms of the Amended ESPP, to determine eligibility and to adjudicate any disputed claims filed under the Amended ESPP. Any rights or responsibilities given to the Administrative Plan Committee under the Amended ESPP may be exercised by the Board, and the Administrative Plan Committee may delegate the routine day-to-day administration of the Amended ESPP to other persons or organizations, including to any employee of our Company.

Eligibility

All employees who are at least 18 years of age and employed by our Company or any participating subsidiaries of our Company will generally be eligible to participate in the Amended ESPP; however, the Administrative Plan Committee may exclude employees whose customary employment is for not more than 20 hours per week and/or five months in any calendar year. In addition, the Administrative Plan Committee may exclude employees who are citizens or residents of a foreign jurisdiction if the grant of an option to such an employee is prohibited under the laws of the foreign jurisdiction or if compliance with the laws of the foreign jurisdiction would cause the Amended ESPP to violate the provisions of Section 423 of the Code.

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As of March 17, 2022, approximately 15,700 employees of our Company and our subsidiaries were eligible to participate in the Amended ESPP.

Offering Periods

The Amended ESPP currently operates in consecutive quarterly periods referred to as “offering periods.” The Board, the Administrative Plan Committee and our Company’s chief executive officer may change the duration (including the commencement date) of future offering periods without stockholder approval. However, offering periods may not last longer than the maximum offering period permitted under Section 423 of the Code.

Purchase Price

The purchase price for each option will equal 85% of the lesser of the fair market value of a share of our Company’s common stock (i) on the first day of the offering period or (ii) on the last day of the offering period (such date, the “Exercise Date’). The Board, the Administrative Plan Committee or our Company’s chief executive officer may, prior to the start of any offering period, provide that the purchase price for each option will equal a different amount that is no less than 85% of the fair market value of a share of our Company’s common stock on either the first or last day of the offering period.

Payroll Deductions

A participant must designate in his or her enrollment package the amount (if any) of compensation to be deducted during that offering period for the purchase of stock under the Amended ESPP. Unless otherwise determined by the Administrative Plan Committee, this election may be decreased during the offering period, subject to any limitations on the number of changes determined by the Administrative Plan Committee, and will continue in effect for future offering periods unless terminated (or increased or decreased) by the participant. Each participant’s payroll deductions under the Amended ESPP will be credited to a bookkeeping account in his or her name under the Amended ESPP. Amounts contributed to the Amended ESPP constitute general corporate assets of our Company and may be used for any corporate purpose.

Purchase of Stock

A participant properly enrolled in the Amended ESPP for an offering period will be granted an option to purchase shares of our Company’s common stock. Each participant’s option will permit the participant to purchase a number of shares determined by dividing the employee’s accumulated payroll deductions for the offering period by the applicable purchase price. Unless a participant withdraws from the Amended ESPP, each option granted under the Amended ESPP will automatically be exercised on the Exercise Date, and the number of shares acquired by a participant will be determined by dividing the participant’s Amended ESPP account balance as of the Exercise Date for the offering period by the purchase price of the option.

Withdrawal

A participant may also elect to withdraw from any offering period on or before a date designated by the Administrative Plan Committee, in which case the participant’s payroll deductions will be refunded and the participant’s outstanding options will terminate.  

Limits on Authorized Shares; Limits on Contributions

If our Company’s stockholders approve the Amended ESPP, the maximum number of shares of our Company’s common stock that may be purchased will increase from 5,000,000 to 14,000,000 (subject to adjustment as described below).

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Participation in the Amended ESPP is also subject to the following limits:

Termination of Employment

If a participant ceases to be an eligible employee for any reason, such participant will immediately and automatically be removed from the Amended ESPP. As such, the participant’s payroll deductions will automatically cease, the participant’s payroll deductions will be refunded, and the participant’s outstanding options will terminate.

Corporate Transactions

Upon the occurrence of a sale of all or substantially all the business, stock or assets of our Company or any merger, combination, consolidation, exchange or other reorganization or similar event in connection with which our Company does not survive (or does not survive as a public company in respect of our common stock), the Board or Administrative Plan Committee may make provision for the assumption, substitution, or exchange of the outstanding options based upon, to the extent relevant, the distribution or consideration payable to holders of the common stock upon or in respect of such event. If the Board or Administrative Plan Committee fails to make such a provision or if the outstanding options would otherwise not continue in accordance with their terms, then the in-progress offering period will be shortened by establishing a new Exercise Date that is before the date of the corporate transaction.

Liquidation or Dissolution

If our Company proposes to dissolve or liquidate, unless otherwise provided by the Board or the Administrative Plan Committee, the then in-progress offering period will be shortened by establishing a new Exercise Date that is before the date of the liquidation or dissolution.

Adjustments

The number and type of shares of stock available under the Amended ESPP or subject to outstanding options, as well as the purchase price of outstanding options and the share limits under the Amended ESPP, are subject to adjustment in the event of certain reclassifications, reorganizations, mergers, consolidation, combinations, recapitalizations, spin-offs, stock splits, stock dividends, extraordinary dividends or distributions of property to the stockholders or any similar unusual or extraordinary corporate transaction in respect of our Company’s common stock.

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Transfer Restrictions

A participant’s rights with respect to options or the purchase of shares under the Amended ESPP, as well as payroll deductions credited to his or her Amended ESPP account, may not be assigned, transferred, pledged or otherwise disposed of in any way except by will or the laws of descent and distribution.

Amendments

The Board or the Administrative Plan Committee generally may amend, suspend, or terminate the Amended ESPP at any time and in any manner, provided that, with limited exceptions, the action may not adversely affect a participant’s rights under his or her outstanding options. Stockholder approval for an amendment to the Amended ESPP will generally only be required to the extent necessary to meet the requirements of Section 423 of the Code or to the extent otherwise required by law or applicable stock exchange rules.

Subplans

The Board or the Administrative Plan Committee may adopt subplans applicable to particular subsidiaries of our Company, which may be designed to be outside the scope of Section 423 of the Code.

Term

The ESPP originally became effective on May 28, 2010 and was amended and restated effective July 1, 2013. Subject to stockholder approval, the Amended ESPP will become effective on July 1, 2022 and the Amended ESPP will continue in effect for a term of 10 years (until July 1, 2032), unless terminated earlier by the Board or its delegate.

U.S. Federal Income Tax Consequences

The rules concerning the federal income tax consequences with respect to the purchase of shares under the Amended ESPP are quite technical. Moreover, the applicable statutory provisions are subject to change, as are their interpretations and applications, which may vary in individual circumstances. Therefore, the following is designed to provide a general summary of the current U.S. federal income tax principles applicable to the Amended ESPP. The following summary is not intended to be exhaustive and, among other considerations, does not describe the deferred compensation provisions of Section 409A of the Code to the extent an award is subject to and does not satisfy those rules, nor does it describe gift, estate, social security, state, local or international tax consequences. In addition, if one or more sub-plans are established for employees of non-U.S. subsidiaries, the tax rules may be different than discussed below.

The Amended ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. Participant contributions to the Amended ESPP through payroll deductions are made on an after-tax basis. That is, a participant’s payroll deductions that are contributed to the Amended ESPP are deducted from compensation that is taxable to the participant and for which our Company is generally entitled to a tax deduction.

Generally, no taxable income is recognized by a participant with respect to either the grant or exercise of his or her Amended ESPP option. Our Company will have no tax deduction with respect to either of those events. A participant will generally recognize income (or loss) only upon a sale or disposition of any shares that the participant acquires under the Amended ESPP. The particular tax consequences of a sale or disposition of shares acquired under the Amended ESPP depend on whether the participant has held the shares for a “Required Holding Period” before selling or disposing of the shares. The Required Holding Period ends on the later of (i) two years after the first day of the offering period in which the

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participant acquired the shares, or (ii) one year after the Exercise Date on which the participant acquired the shares.

If the participant holds the shares for the Required Holding Period and then sells the shares at a price in excess of the purchase price paid for the shares, the gain on the sale of the shares will be taxed as ordinary income to the participant to the extent of the lesser of (i) the amount by which the fair market value of the shares on the first day of the offering period in which the participant acquired the shares exceeded the purchase price of the shares (calculated as though the shares had been purchased on the first day of the offering period), or (ii) the gain on the sale of the shares. Any portion of the participant’s gain on the sale of the shares not taxed as ordinary income will be taxed as long-term capital gain. If the participant holds the shares for the Required Holding Period and then sells the shares at a price less than the purchase price paid for the shares, the loss on the sale will be treated as a long-term capital loss to the participant. Our Company will not be entitled to a tax deduction with respect to any shares held by the participant for the Required Holding Period, regardless of whether the shares are eventually sold at a gain or a loss.

The participant has a “Disqualifying Disposition” for tax purposes if the participant disposes of the shares before the participant has held the shares for the Required Holding Period. If the participant sells the shares in a Disqualifying Disposition, regardless of whether the shares are sold at a gain or a loss, the participant will realize ordinary income in an amount equal to the difference between the purchase price paid for the shares and the fair market value of the shares on the Exercise Date on which the participant acquired the shares, and our Company generally will be entitled to a corresponding tax deduction. In addition, if the participant makes a Disqualifying Disposition of the shares at a price in excess of the fair market value of the shares on the Exercise Date, the participant will realize capital gain in an amount equal to the difference between the selling price of the shares and the fair market value of the shares on the Exercise Date. Alternatively, if the participant makes a Disqualifying Disposition of the shares at a price less than the fair market value of the shares on the Exercise Date, the participant will realize a capital loss in an amount equal to the difference between the fair market value of the shares on the Exercise Date and the selling price of the shares. Our Company will not be entitled to a tax deduction with respect to any capital gain realized by a participant.

Specific Benefits Under the Amended ESPP

The benefits that will be received by or allocated to eligible employees under the Amended ESPP cannot be determined at this time because the amount of payroll deductions contributed to purchase shares of our Company’s common stock under the Amended ESPP (subject to the limitations discussed above) is entirely within the discretion of each participant.

The following table sets forth the number of shares purchased under the ESPP from 2010 (the year in which the ESPP was first adopted) through 2021 by our named executive officers and the specified groups set forth below.

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The closing price of a share of our Company’s common stock as of March 17, 2022, was $68.32 per share.

We intend to file with the U.S. Securities and Exchange Commission, after our stockholders approve the Amended ESPP, a registration statement on Form S-8 covering the new shares reserved for issuance under the ESPP.

Please refer to the Securities Authorized for Issuance under Equity Compensation Plans table on page 70 for details regarding equity securities of our Company that were authorized for issuance under equity compensation plans of our Company as of December 31, 2021.

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Item 4.    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, 2022. Representatives of PwC are expected to participate in the annual meeting, and, if they do participate in 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 our 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. None of the directors or officers included in the table below have the right to acquire any shares within 60 days of the record date.

Board and Committee Meetings

Our Board held six meetings during 2021. No incumbent director attended less than 75% of the aggregate of all 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,

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compensation and executive committee. Our Board also has an ad-hoc information security risk oversight, accountability and review committee (“ROAR committee”). The following table reflects the composition of each of the standing committees as of the date of this proxy statement.

Audit Committee

The functions performed by the Audit Committee include:

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The Audit Committee’s charter is posted in the corporate governance section of our website 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.

Compensation Committee

The Compensation Committee establishes compensation rates and procedures with respect to our executive officers, including the determination of their annual bonus awards, monitors our equity compensation plans, assesses risk with respect to our compensation programs and makes recommendations to the Board regarding director compensation. The Compensation Committee’s charter is posted in the corporate governance section of our website 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 “Director Compensation,” which begins on page 67. 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 “Compensation Decision Process,” which begins on page 38.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to become directors of our Company; recommending to the Board nominees for directorships to be filled by the Board or by the stockholders; developing, recommending to the Board and periodically reviewing the corporate governance principles applicable to our Company; overseeing our Company’s succession plan for the chief executive officer and the succession planning process for other key employees; and overseeing sustainability matters material to our Company’s business. This committee’s charter is posted in the corporate governance section of our website at www.firstam.com. The committee’s charter outlines the procedures by which certain stockholders of our Company may recommend director nominees to the Board. In particular, the committee will accept and consider, in its discretion, director recommendations from any stockholder holding in excess of five percent of our 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 our Company at 1 First American Way, Santa Ana, California 92707. 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.

Our Bylaws also provide for proxy-access, which is described in the section “Stockholder Proposals, Director Nominations and Proxy Access” on page 71. In 2022, in response to stockholder feedback, we amended our Bylaws to implement majority voting in uncontested elections of directors. In contested elections, where the number of nominees exceeds the number of directors to be elected, plurality voting will continue to apply. Our Bylaws also require that any director who does not receive a majority of the votes cast will promptly tender his or her resignation for consideration by the Nominating and Corporate Governance Committee and the Board.

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As stated in the corporate governance guidelines, the committee takes into account all factors it considers appropriate in identifying and evaluating candidates for membership on the 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 and evaluating potential candidates for nomination.

Our corporate governance guidelines set forth a policy for the consideration of diversity in identifying nominees for director. The policy recognizes the benefits associated with a diverse board and, as indicated above, requires that the Nominating and Corporate Governance Committee consider diversity as a factor when identifying and evaluating candidates for membership on the Board. The policy utilizes a broad conception of diversity, including professional and educational background, prior experience on other boards, political and social perspectives, as well as race, national origin, gender and sexual orientation. The Nominating and Corporate Governance Committee assessed the effectiveness of the Board diversity policy by considering, among other factors, self-assessed director skills and experience; the race, national origin, gender and sexual orientation of Board members; and the practices of the Board and the committee when identifying and evaluating candidates for membership on the Board. The California corporations code required us to have three or more female directors and at least one director from an underrepresented community at some point during 2021. During 2021, we had the minimum number of female directors and directors from underrepresented communities necessary to comply with California law.

Utilizing the factors and in recognition of the legal requirements described above, the committee makes recommendations, as it deems appropriate, regarding the composition and size of the Board. The priorities and emphasis of the 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. The Board has not granted any waivers or exemptions to this policy.

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 Kenneth D. DeGiorgio and Dennis J. Gilmore, is “independent” as that term is defined in the corporate governance rules of the New York Stock Exchange for listed companies and in accordance with our Company’s corporate governance guidelines. In addition, each member of the Audit Committee and the Compensation Committee is independent under the additional standards applicable to the respective committee under the Securities Exchange Act of 1934, as amended, and the New York Stock Exchange listing standards. In making these determinations, the Board considered the following relationships between directors and our Company: Messrs. Gilyard and McKee are affiliated with, and Mss. McCarthy and Wyrsch were previously affiliated with, entities that do business with, or that represent clients that do business with, us in the ordinary course from time to time (and the amounts involved in each case are significantly less than 2% of such entity’s consolidated gross revenues); each of Messrs.

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Doti and Kennedy is or recently was affiliated with one or more nonprofit organizations to which our Company and/or our management has made donations from time to time (and the amounts in each case are significantly less than $1 million and 2% of the nonprofit organization’s consolidated gross revenues); and Mr. Kennedy receives standard board fees for his service as a director of our Company’s trust subsidiary, as further described in the section entitled “Director Compensation,” which begins on page 67. Each of the relationships above, while considered by the Board, falls within our categorical independence standards contained in the Board’s corporate governance guidelines, which are available on the corporate governance section of our website at www.firstam.com. The Board also considered the following relationships between Mr. Kennedy and our Company: he was employed as our executive chairman until his retirement in February 2012; for serving as chairman of the Board until February 9, 2022 and as lead independent director of the Board since then, he receives Company-provided office space, mobile devices, computer, other office equipment and administrative support as set forth in the section entitled “Director Compensation,” which begins on page 67; and his son is employed by a subsidiary of our Company as further described in the section entitled “Transactions and Litigation with Management and Others” on page 23.

Board Leadership Structure; Meetings of Independent Directors

Our Board believes it is important to select our Company’s chairman and our Company’s chief executive officer in the manner it considers in the best interests of our 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. Gilmore and Mr. DeGiorgio, respectively. During 2021, Mr. Kennedy served as our chairman and Mr. Gilmore as our chief executive officer.

In addition to a chairman, we also have a lead independent director, currently Mr. Kennedy. Dr. Doti served as our lead independent director during 2021. The lead director is responsible for chairing and coordinating the agenda for the executive sessions of independent directors. In 2021, the independent directors met four times in executive session. In addition, the lead director may 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 our corporate governance policies; and (v) the Compensation Committee’s oversight of the implementation of and compliance with our 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 our Company 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 our 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.

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Annual Performance Evaluation

The Board and each of its committees conduct an annual self-evaluation to determine whether the Board and its committees are functioning effectively. In connection with this annual evaluation, directors are given an opportunity to evaluate the effectiveness of each other and to evaluate their own personal effectiveness. The results of the evaluation are reported to the Board and each committee.

Risk Oversight

The Board’s responsibilities in overseeing our Company’s management and business to maximize long-term stockholder value include oversight of our 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:

In performing these functions, the committee regularly receives reports from management and internal and external auditors regarding our Company’s:

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Separately, the Compensation Committee oversees our Company’s compensation policies and practices and has assessed whether our 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 our Company. In arriving at that conclusion, the Compensation Committee considered, among other factors, our 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 three to four years; the extent to which qualitative judgments are involved in the compensatory arrangements; the amount of compensation paid as sales commissions, management’s review of such compensation paid and the localized nature of the commission payments; controls, such as underwriting and approval controls; and the extent to which compensatory arrangements can be changed if circumstances evidence increased risk associated with such arrangements.

As a supplement to the oversight of the Audit Committee of our Company’s information security program, the Board formed in 2019 the ROAR committee as an ad-hoc committee comprised of Ms. McCarthy (chair) and Mr. McKernan to oversee the implementation of certain information security-related recommendations, to provide Board-level feedback to management on information security matters and to drive accountability for information security.

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 our Company’s directors attended the virtual meeting.

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 our Company (individually or as a group), by writing to such director(s) at our Company’s principal executive offices, 1 First American Way, Santa Ana, California 92707. In general, stockholder communications delivered to our Company for forwarding to Board members about bona fide issues and concerning our Company related to the duties and responsibilities of the Board will be forwarded in accordance with the stockholder’s instructions. Directors receiving such communications will respond as such directors deem appropriate, including the possibility of referring the matter to management of our Company, to our Company’s internal audit department, 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 1-866-921-6714. 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.

Transactions and Litigation with Management and Others

The Board of Directors has adopted a written policy regarding related party transactions, which generally requires the Nominating and Corporate Governance Committee’s review and approval of transactions

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involving amounts in excess of $120,000 between our Company and/or our affiliates, on the one hand, and, on the other hand, any of our Company’s directors, director-nominees, executive officers, stockholders beneficially owning in excess of 5% of our Company’s common stock or any of their immediate family members that have a direct or indirect material interest in the transaction. If the proposed transaction involves $1,000,000 or less, then the chair of the Nominating and Corporate Governance Committee may approve the transaction.

Certain transactions, including compensatory arrangements reported in this proxy statement for executive officers and directors of our Company, are deemed to be pre-approved by the Nominating and Corporate Governance Committee under the terms of the policy. In cases where the potential transaction would involve the executive 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 our Company.

Mr. Kennedy’s son is employed by a subsidiary of our Company as a managing director, agency division. His base salary in 2021 was $225,000, his cash bonus for 2021 (paid in 2022) was $357,500 and the dollar value of restricted stock units granted to him in 2022 (in connection with 2021 performance) was approximately $292,500. Some of Mr. Kennedy’s son’s 2020 compensation was received in 2021 and disclosed in last year’s proxy statement. 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.

For information on transactions involving our Company and persons or groups of stockholders who are known to us to be the beneficial owners of more than 5% of our common stock, see the footnotes to the table in the section “Who are the largest principal stockholders outside of management?” on page 80.

In addition, our Company and our Board, other than Mr. DeGiorgio, and certain executives are parties to a stockholder derivative action, Hollett vs. Gilmore, et al., filed on November 25, 2020 and pending in the United States District Court for the Central District of California. The allegations arise out of the information security incident that occurred during the second quarter of 2019 and the resulting legal proceedings and disclosures made at the time of the incident. While the ultimate disposition is not yet determinable, our Company does not believe it will have a material adverse effect on our Company’s financial condition, results of operations or cash flows.

Executive Officers

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

All officers of our Company are appointed annually by the Board on the day of the annual meeting of stockholders.

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Compensation Discussion and Analysis

Introduction

In this section, we describe our executive compensation program for our named executive officers (“NEOs”). Our Company’s NEOs for 2021 were:

Executive Summary

review of our executive compensation program and incorporating feedback received from our stockholders, the Committee made the following changes to our compensation program, as described in more detail in this Compensation Discussion and Analysis section:

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•     Shifted 25% of long-term incentive (“LTI”) awards for executive officers to multi-year, metric-based performance awards based on total stockholder return (“TSR”) relative to the S&P MidCap 400 Index over a three-year period, with performance-based payouts ranging from 0% to 200% of target. These awards vest three years after the grant date.

•     Enhanced disclosures in this proxy statement regarding our executive compensation program, including additional disclosures regarding:

The changes that the Committee made in 2022 (based on 2021 performance) resulted in a significantly greater portion of the payout of long-term awards being metric-based compared to payout in 2021 (based on 2020 performance).

In addition to the changes described above (and as further described below) the annual incentive bonus plan was modified so that bonuses for 2022 performance and later could be earned up to 200% of target (previously 175%) and equity awards under the bonus plan would be subject to three-year vesting, rather than four-year vesting. Both changes were consistent with market practice. Furthermore, the vesting

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period for LTI RSUs granted in 2022 and later was changed from four to three years, again consistent with market practice.

The Committee believes that our Company paid compensation to management commensurate with its performance and consistent with our Company’s pay-for-performance philosophy.

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Total Revenues (in billions) $6.2 $7.1 $9.2 Net income attributable to the Company $707 $696 $1241 Pretax Margin (Title Segment) 16.1% 15.7% 16.3% Return on Equity 17.3% 14.9% 23.2% 2019 2020 2021

Note: The charts above reflect Company results under GAAP. The Committee makes certain non-GAAP adjustments in connection with its compensation programs, which are further described below.

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Execution on Company Strategy

2021 Performance Metric Results

The NEO annual cash bonuses and annual equity bonuses were paid out at 175% of target for all NEOs. These payout amounts reflect the results of the two financial metrics utilized by the Committee: return on equity and pretax margin. Target and actual results of these metrics for 2021 are set forth below.

Note: The Committee’s definitions of pretax margin and return on equity are described on page 42 below. Actual results set forth above have been adjusted to exclude current year net investment gains/losses from the investment portfolio and certain current year net investment gains/losses from our Company’s venture investment portfolio. Return on equity also excludes accumulated other comprehensive income/loss and noncontrolling interests. These are non-GAAP financial measures. Please see Appendix A for the rationale behind the presentation of these measures and a reconciliation of these amounts to the nearest GAAP financial measures.

The annual incentive plan gives the Committee the discretion to adjust the metric-driven payout by up to 30 percentage points to account for factors that may impact our Company’s return on equity or pretax margin, including unanticipated external factors, such as regulatory changes or changes in interest rates; success against strategic initiatives designed to create long-term stockholder value, such as innovation efforts, risk management, employee engagement, or market share gains/losses in key markets; or environmental, social and governance (“ESG”) actions, initiatives, or omissions that impact, and reflect the role of our Company in, broader society, such as employee development, inclusion efforts, privacy and data protection and sustainability/environmental impact. The Committee also retains the ability to pay ultimately a lower amount, including the discretion not to pay an annual incentive bonus.  For 2021, the Committee did not make any discretionary adjustments.

The Committee believes that the results of the 2021 executive compensation program, as disclosed and discussed herein, reflect its pay-for-performance philosophy.

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Pay Philosophy

Pay Objectives

Our 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 our Company’s consolidated financial performance and a lesser portion be related to the Committee’s qualitative assessment of the contribution of each individual executive officer. The Committee also believes that there is value in consistency in our Company’s executive officer compensation program. As a result, while target performance levels change from year to year, the general structure of the program typically remains consistent from year to year. From time to time, the Committee makes adjustments to the compensation program based on stockholder feedback, changes in market compensation practices or to better accomplish the Committee’s objectives.

Our Company’s approach is designed to develop and administer programs that will achieve the following objectives:

Compensation Mix

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

For NEOs, the mix of compensation is weighted heavily toward at-risk pay. This is consistent with the overall philosophy of maintaining a pay mix that results fundamentally in a pay-for-performance orientation.

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The chart below shows the percentage of our NEOs’ 2021 total compensation at target that was fixed versus performance-based, as well as the percentage of RSUs that were or will be determined based on metric-driven performance criteria verses RSUs that were determined based on the subjective judgment of the Committee.

Target Compensation⁽¹⁾

CEO Base Salary 11% LTI Awards 44% Target AIP Bonus RSUs 25% Target AIP Cash Bonus 20% Metric Based Equity as a Percentage of all RSUs 52% Average of Other NEOs Base Salary 20% LTI Awards 41% Target AIP Bonus RSUs 19% Target AIP Cash Bonus 20% Metric Based Equity as a Percentage of all RSUs

Say on Pay Results and Stockholder Outreach

As part of its process in determining executive compensation levels and structure for 2021, the Committee has reviewed the results of last year’s Say on Pay proposal, in which approximately 68% of our Company’s shares present and entitled to vote approved 2020 executive compensation. Continuing stockholder support for the Say on Pay proposal reinforces the Committee’s belief that it should continue

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of our outstanding shares. Holders of approximately 58 percent of our outstanding shares responded to our outreach and approximately 49 percent chose to actively engage with us, including 7 stockholders that voted against our 2021 Say on Pay proposal, representing approximately 8 percent of our outstanding shares. Our management met with the engaging stockholders, and, in certain instances, a member of the Committee joined these meetings. During these meetings, we discussed our executive compensation program and any other subjects of interest to the stockholder. One of our primary goals for these meetings was to ensure that we understood our stockholders’ views concerning our executive compensation program, and that our stockholders understood our program. The stockholder feedback was reviewed and discussed with the Committee. Among the feedback we received was a preference that a significant portion of long-term incentive awards be made pursuant to a multi-year, metric driven model. Stockholder feedback also recognized that our annual incentive bonus plan, which is based on objective, annual performance metrics, was atypical because it provides for the payment of the bonus with a combination of cash and equity, instead of the more common practice of all cash, and that this annual metric-based program should be considered in connection with any long-term incentive program changes.

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Summary of Executive Compensation Practices

The table below highlights certain of our executive compensation practices, including practices we have implemented that drive performance as well as those we have prohibited because we do not believe they serve our stockholders’ interests.

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Executive Compensation Program

Key Pay Elements

The following chart summarizes the key pay elements for our NEOs. Each element is described in detail beginning on page 39 in the Section “Pay Elements and Practices.”

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Compensation Element Purpose How It Links to Performance Base Salary To provide a fixed source of income Reviewed annually and adjusted based on individual and Company performance and other factors, including base salary levels at peer companies and/or published market survey’s METRIC BASED Annual Cash Bonus To reward the achievement of annual performance Variable and based on measurable Company performance against financial metrics, subject to discretionary Committee adjustment; target levels reviewed annually and adjusted based on individual and Company performance and other factors, including annual cash bonus levels at peer companies and/or published market surveys Annual Equity Bonus To reward the achievement of annual performance, I prove retention and incentivize long-term Company performance Variable and based on measurable Company performance against financial metrics. Subject to discretionary committee adjustment; target levels reviewed annually and adjusted based on individual and Company performance and other factors, including annual equity award levels at peer companies and/or published market surveys; subject to a four-year vesting period (changing to three years for grants beginning in 2023) Long-Term Equity Incentive (Performance Vesting) To incentivize for long-term Company performance Variable and based on Committee assessment of company and individual performance together with compensation levels at peer companies and/or in published market surveys and other factors; value based on relative TSR over a three-year performance period; vests three years after grant Long-Term Equity Incentive (Time Vesting) To incentivize for long-term Company performance Variable and based on Committee assessment of Company and individual performance together with compensation levels at peer companies or in publish market surveys and other factors, subject to a three-year vesting period

Compensation Element Purpose How it Links to Performance FIXED AT-RISK Base Salary Annual Cash Bonus Annual Equity Bonus Long-Term Equity Incentive To provide a fixed source of income To reward the achievement of annual performance To reward the achievement of annual performance To incentivize for long-term Company performance Reviewed annually and adjusted based on individual and Company performance and other factors, including base salary levels at peer companies Variable and based on measurable Company performance against financial targets, subject to discretionary Committee adjustment; target levels reviewed annually and adjusted based on individual and Company performance and other factors, including annual cash bonus levels at peer companies Variable and based on measurable Company performance against financial targets, subject to discretionary Committee adjustment; target levels reviewed annually and adjusted based on individual and Company performance and other factors, including annual equity bonus levels at peer companies; subject to a four-year vesting period Variable and based on Committee assessment of Company and individual performance together with compensation levels at peer companies and other factors; subject to a four-year vesting period

The comparator companies for 2021 were:

These companies are the same as those utilized by the Committee with respect to 2020 executive compensation. 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 our Company’s primary industry with financial and operational characteristics similar to our Company’s.

Use of Comparator Companies and Market Compensation Studies

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

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market data at the 25th, 50th, and 75th 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 different financial characteristics of our 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.

Compensation Decision Process

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Pay Elements and Practices

As noted above, our Company utilizes four main components of compensation: (1) base salary, (2) annual cash bonus, (3) annual equity bonus, and (4) long-term equity incentive. Each of the pay elements is described in detail below.

Base Salary

The Committee sets base salaries for executive officers based on the individual’s position within our Company and the individual’s 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 our Company, new roles and/or responsibilities assumed by the executive officer, the general performance of the business units or departments over which the

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executive officer has responsibility, the significance of the executive officer’s impact on the achievement of our Company’s strategic goals, the executive officer’s length of service with our Company and the executive officer’s base salary relative to the base salaries of similar individuals in peer companies and market data. 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 our Company’s peer group and relevant compensation survey data, the Committee also takes into account 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 “Employment Agreements,” Messrs. Gilmore, DeGiorgio, Leavell and Seaton have employment agreements with our 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 February of 2021, the Committee reviewed executive officer compensation, including 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 our Company during 2020 and the fact that base salaries for the NEOs, other than Mr. Wajner, had not been increased since 2018, the base salaries should be adjusted for all NEOs other than Mr. Gilmore. As a result, the Committee increased Mr. DeGiorgio’s base salary from $775,000 to $825,000; Mr. Leavell’s from $725,000 to $775,000; Mr. Seaton’s from $650,000 to $700,000; and Mr. Wajner’s from $315,000 to $325,000.

In summary, the base salaries of the NEOs as of December 31, 2020 and as of December 31, 2021, and the minimum base salary as required by their respective employment agreements are as follows:

In February 2022, the Committee reviewed executive officer base salaries and determined that, based on its assessment of relevant peer company and/or market data, the base salaries were appropriate and did not warrant adjustment, with the exception of Mr. Wajner, whose base salary was increased to $350,000 from $325,000. In March 2022, the Committee reviewed Mr. DeGiorgio’s base salary in connection with his promotion to CEO on February 4, 2022, and determined that, based on its assessment of relevant peer company data, his base salary should be increased from $825,000 to $925,000, effective as of the date of his promotion.

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Annual Incentive Bonus

desire to increase alignment between participating employees and our Company’s long-term stockholders, to discourage participating employees from taking excessive risk for short-term gains, to focus employees on increasing long-term stockholder value and to increase retention. Accordingly, the Committee believes that an incentive structure tied to annual performance is most effective in motivating and rewarding executive officers to enhance long-term stockholder value.

As was the case in recent years, the Committee structured payouts under the 2021 annual incentive program to be based on measurable performance against specific financial targets that the Committee believes to be key drivers of stockholder value. Like 2020, financial targets collectively accounted for 100% of the annual incentive bonus payout for 2021 to NEOs, 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 annual incentive bonus for unanticipated external factors, such as regulatory changes or meaningful changes in interest

The Committee also retains the ability to pay ultimately a lower amount, including the discretion not to pay an annual incentive bonus.

The 2021 annual incentive bonus payable to each executive officer was determined by adjusting the applicable portion of the target incentive bonus amount (listed in the tables below under the column

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entitled “Weighting”) 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).

Consistent with recent years, for 2021 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 our Company’s 2021 financial plan, which was unanimously approved by our Company’s Board of Directors following the general process described on page 38. The pretax margin and return on equity targets were determined based on earnings that exceeded the consensus of estimates by analysts at the time. The Committee believes these metrics, and the related performance levels, are indicators as to whether our 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 our Company.

The target performance levels and actual performance for 2021 with respect to the financial metrics were as follows:

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In considering whether a Discretionary Adjustment should be made to the annual incentive bonus, the Committee took into account notable achievements, as well as challenges, towards creating long-term value for stockholders. For 2021, the Committee did not make any Discretionary Adjustments.

Subject to the Committee’s ability to award a lower amount, including the ability not to award any bonus, for 2022 the annual incentive bonuses of the executive officers are expected to again be determined based on our Company’s return on equity (weighted 50%) and pretax margin (weighted 50%). For 2022, the Committee changed the superior performance level payout of the incentive bonus from 175% to 200%, with the superior performance threshold increasing from 125% to 133% of target. Actual performance could result in payouts ranging from 50% to 200% of target, or 0% if performance is below threshold levels. Also for 2022, the Committee revised the calculation of the return on equity and pretax margin financial metrics to exclude all net investment gains/losses from our Company’s venture investment portfolio, including those gains/losses recorded in connection with a liquidity event. The Committee reviews the performance of our investment portfolio and venture investment portfolio when considering whether to make a Discretionary Adjustment. For 2022, as was the case with respect to 2021, non-metric factors can result in a Discretionary Adjustment that can modify the incentive bonus payout by up to +/- 30 percentage points.

The 2022 target annual incentive bonus amount will be adjusted in the same manner as in 2021, 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 our Company’s annual incentive 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.

Annual Cash Bonus

As part of its review in early 2021, the Committee set target cash bonus amounts as follows:

The decision to change the target cash bonus amounts for each NEO was based on the Committee’s assessment of relevant peer company and/or market data, particularly in light of the strong performance of both the executives and our Company during 2020 and the fact that target cash bonuses for the NEOs, other than Mr. Wajner, had not been increased since 2018.

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Each NEO’s cash bonus for 2021 was determined by adjusting the target cash bonus amount based on the level of achievement of the annual incentive bonus financial metrics described above. The following table summarizes the computation of the 2021 annual cash bonuses for each NEO. It also provides the cash bonus amount for 2020 for comparison purposes. The amounts in the table below are reflected in the Summary Compensation Table under the column entitled “Non-Equity Incentive Plan Compensation.”

In February 2022, the Committee determined target cash bonus amounts for 2022. The Committee determined, after reviewing relevant market data, that the total annual incentive plan bonus amount (both cash and Bonus RSUs) for Mr. Wajner warranted an increase of $10,000. Under the terms of the annual incentive plan, based on Mr. Wajner’s total expected compensation for 2022, a greater percentage of his annual bonus will be paid in Bonus RSUs and less in cash. Consequently, the Committee decreased Mr. Wajner’s target cash bonus from $157,500 to $153,000. The Committee determined that peer company and market data did not warrant an adjustment to the target cash bonuses of the other NEOs. In March 2022, the Committee reviewed Mr. DeGiorgio’s target cash bonus amount in connection with his promotion to CEO in February 2022, and determined that, based on its assessment of relevant peer company data, his target annual cash bonus for 2022 should be increased from $875,000 to $1,750,000 for the full year.

Annual Equity Bonus

For 2021, the Committee set the target Bonus RSU amounts as follows: