10-K/A: Landsea Homes Files Amended 10-K to Include Omitted Information on Directors, Executives, and Governance

Landsea Homes Corporation files an amendment to its 2024 annual report to include previously omitted information regarding directors, executive officers, and corporate governance.

Summary

• Landsea Homes Corporation filed an amendment to its original Form 10-K for the fiscal year ended December 31, 2024.
• The amendment includes information previously omitted from Part III, Items 10 through 14, related to directors, executive officers, and corporate governance.
• The original filing omitted this information in reliance on General Instruction G(3) to Form 10-K, which allows incorporation by reference from a definitive proxy statement.
• The company has also amended Part IV, Item 15 to include currently dated certifications from the principal executive officer and principal financial officer.
• The amendment does not change any other information in the original Form 10-K and does not reflect subsequent events.
• As of June 30, 2024, the aggregate market value of the registrant's common stock held by non-affiliates was approximately $169.5 million.
• As of April 24, 2025, there were 36,409,560 shares of the registrant's common stock issued and outstanding.

Sentiment

Score: 6

Explanation: The document is primarily factual and descriptive, with a neutral tone. The need for an amendment suggests a minor negative aspect, but the overall content is not overtly positive or negative.

Positives

• The company is providing greater transparency by including previously omitted information about its directors, executive officers, and corporate governance.
• The company has a clawback policy in place to recover excess incentive-based compensation in the event of an accounting restatement.
• The company has stock ownership and retention guidelines for executive officers and directors to align their interests with shareholders.
• The company has adopted a Code of Business Conduct and Ethics that applies to all directors, officers, and employees.
• The company's executive compensation program is designed to link compensation to performance and align with shareholder value.
• The company's board includes several independent directors, ensuring oversight and accountability.
• The company has various committees, including Audit, Compensation, Nominating and Governance, Executive Land, and ESG, to oversee different aspects of the business.

Negatives

• The company had to file an amendment to its annual report, indicating an initial omission of required information.
• The company's adjusted EPS performance did not meet the target under the 2024 annual bonus program.
• The company's average ROE performance did not meet the threshold for the 2022 PSUs, resulting in a 0% payout.
• C. Kelly Rentzel, the General Counsel, was late in filing a Form 3 and Form 4 in connection with the March 2024 Offering.
• The company has engaged in several registered secondary offerings, which can dilute existing shareholders' equity.

Risks

• The company's reliance on Landsea Holdings for director nominations and certain agreements could create conflicts of interest.
• The company's related party transactions, such as land sales and leases with Landsea Capital, could raise concerns about fairness and transparency.
• The company's dependence on the Landsea trademark could be a risk if the trademark license agreement is terminated.
• The company's executive compensation program could incentivize short-term performance at the expense of long-term value creation.
• The company's risk oversight processes may not be sufficient to identify and manage all potential risks.
• The company's insider trading policy may not be effective in preventing insider trading.
• The company's clawback policy may not be effective in recovering all excess incentive-based compensation.
• The company's stock ownership and retention guidelines may not be effective in aligning the interests of executive officers and directors with shareholders.

Future Outlook

The document does not contain a specific future outlook section, but it does mention that the company is focused on prioritizing growth, financial stability, and the pursuit of long-term shareholder value.

Management Comments

• The Board makes decisions regarding executive compensation based on recommendations given by the Compensation Committee, which are developed based on the advice and guidance provided by Pearl Meyer, the Compensation Committees independent compensation consultant.
• The goal of the Companys executive compensation program is to be competitive in order to attract and retain our executive officers while linking a significant portion of cash compensation to performance objectives and providing a portion of executive compensation as long-term incentive compensation in the form of equity awards.

Industry Context

The document provides information about Landsea Homes' corporate governance, executive compensation, and related party transactions, which are all important aspects of a public company operating in the homebuilding industry. The company's focus on growth, financial stability, and shareholder value is consistent with the goals of many companies in the industry.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• However, the company's corporate governance practices, executive compensation program, and related party transactions can be compared to those of other public homebuilding companies such as D.R. Horton, Lennar, and PulteGroup.
• For example, the company's board composition, committee structure, and director independence can be compared to the best practices recommended by corporate governance experts and organizations such as the National Association of Corporate Directors.
• The company's executive compensation program can be compared to the compensation practices of other homebuilding companies to determine whether it is competitive and aligned with performance.
• The company's related party transactions can be compared to those of other companies to assess whether they are fair and transparent.

Management Changes

Corporate Governance

Related Party Transactions

• The Company entered into a demand registration rights agreement (the Demand Registration Rights Agreement) with respect to the warrants exercisable to purchase one share of the Companys common stock at an exercise price of $11.50 per share issued to Level Field Capital, LLC (the Sponsor) and certain funds and accounts managed by BlackRock, Inc. (the BlackRock Holders) in a private placement on the closing date of the initial public offering of our predecessor, LFAC (the Private Placement Warrants) and the shares of common stock issuable upon exercise of the foregoing and upon conversion of the shares of Class B common stock of LFAC, issued to the Sponsor in August 2017 (Founder Shares).
• On June 12, 2023, the Company entered into an underwriting agreement (the June 2023 Underwriting Agreement) with Landsea Holdings and B. Riley Securities, Inc., as representative of the several underwriters named therein (the June 2023 Underwriters), pursuant to which Landsea Holdings agreed to sell to the June 2023 Underwriters an aggregate of 3,400,000 shares of the Companys common stock at a price per share of $7.50 (before underwriting discounts and commissions), for total proceeds of $24.0 million (the June 2023 Offering).
• On August 21, 2023, the Company entered into an underwriting agreement (the August 2023 Underwriting Agreement) with Green Investment Alpha Limited (Green Investment), a greater than 5% beneficial owner of the Company at such time, and B. Riley Securities, Inc., as representative of the several underwriters named therein (the August 2023 Underwriters), pursuant to which Green Investment agreed to sell to the August 2023 Underwriters an aggregate of 4,207,574 shares of the Companys common stock at a price per share of $9.75 (before underwriting discounts and commissions), for total proceeds of $39.0 million (the August 2023 Offering).
• On March 5, 2024, the Company entered into an underwriting agreement (the March 2024 Underwriting Agreement) with Landsea Holdings and with B. Riley Securities, Inc. and BofA Securities, Inc., as representatives of the several underwriters named therein (the March 2024 Underwriters), pursuant to which Landsea Holdings agreed to sell to the March 2024 Underwriters an aggregate of 2,800,000 shares of the Companys common stock at a price per share of $11.60 (before underwriting discounts and commissions), for total proceeds of $30.9 million (the March 2024 Offering).
• On December 5, 2024, the Company entered into an underwriting agreement (the December 2024 Underwriting Agreement) with B. Riley Securities, Inc., as representative of the several underwriters named therein (the December 2024 Underwriters) and the selling stockholders named therein (the Selling Stockholders), pursuant to which the Selling Stockholders agreed to sell to the December 2024 Underwriters an aggregate of 6,086,957 shares of the Companys common stock at a price per share of $10.25 (before underwriting discounts and commissions), for total proceeds of $59.4 million (the December 2024 Offering).
• On the Closing Date, pursuant to that certain Agreement and Plan of Merger dated August 31, 2020, the Company and Landsea Holdings entered into the Stockholders Agreement whereby, among other things, the parties agreed (i) to certain board composition and nomination requirements, including rights to nominate directors in accordance with defined ownership thresholds, establish certain committees and their respective duties and allow for the compensation of directors, (ii) to provide Landsea Holdings with certain inspection and visitation rights, access to Company management, auditors and financial information, (iii) to provide Landsea Holdings with veto rights with respect to certain actions of the Company, (iv) not to, to the extent permitted by applicable law, share confidential information related to the Company, (v) to waive their right to jury trial and choose Delaware as the choice of law, and (vi) to vote their common stock in furtherance of the aforementioned rights, in each case on terms and subject to the conditions set forth therein.
• On the Closing Date, Landsea Group, the Company, and certain of the Companys subsidiaries (together with the Company, the Licensees), entered into the Trademark License Agreement, pursuant to which Landsea Group agreed, among other things, to grant the Licensees an exclusive license to use the Landsea trademark in connection with the domestic homebuilding business (as such term is defined in the Trademark License Agreement).
• In July 2021, the Company entered into a landbank agreement for a project in its California segment with Landsea Capital Fund I, LLC (Landsea Capital), a subsidiary of Landsea Holdings.
• In December 2021, the Company sold model homes to Landsea Capital for total consideration of $15.2 million.
• In June 2022, Landsea Capital contributed $55.0 million to LS-LCF CA, LLC (the LCF JV), a joint venture between the Company and Landsea Capital.

Stakeholder Impact

• Shareholders: The amendment provides greater transparency regarding the company's leadership and governance, which could increase investor confidence.
• Employees: The company's compensation policies and benefits programs impact employees' financial well-being and job satisfaction.
• Customers: The company's focus on growth and financial stability could lead to improved products and services for customers.
• Suppliers: The company's related party transactions with Landsea Capital could impact suppliers' relationships with the company.
• Creditors: The company's financial performance and risk management practices impact its ability to repay debts to creditors.

Next Steps

• The company will hold its 2025 Annual Meeting of Stockholders.
• Thomas Hartfield will depart from the Board at the 2025 Annual Meeting of Stockholders.
• The Board will decrease from eight to seven directors upon Thomas Hartfield's departure.

Key Dates

Keywords

Landsea Homes, Form 10-K/A, Amendment, Directors, Executive Officers, Corporate Governance, Compensation, Stockholders Agreement, Related Party Transactions, Audit Committee, Risk Oversight, Beneficial Ownership, Equity Compensation