UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

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

Check the appropriate box:

PulteGroup, Inc.

(Name of Registrant as Specified in its Charter)

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

Payment of Filing Fee (Check the appropriate box):

PULTEGROUP, INC.

3350 Peachtree Road NE, Suite 150

Atlanta, Georgia 30326

NOTICE OF 2018 ANNUAL MEETING OF SHAREHOLDERS

By Order of the Board of Directors
TODD N. SHELDON
Executive Vice President, General Counsel and Corporate Secretary

Atlanta, Georgia

March 28, 2018

PROXY SUMMARY

This summary highlights selected information about the items to be voted on at the 2018 Annual Meeting of Shareholders (“Annual Meeting”) of PulteGroup, Inc. (“PulteGroup,” the “Company,” “we” or “our”). This summary does not contain all of the information that you should consider in deciding how to vote. You should read the entire Proxy Statement before voting.

Meeting Agenda and Voting Recommendations

  See pages 6-11 for further information  

DIRECTOR NOMINEES

Name

Principal Professional Experience

Years of Tenure

Current Committee Memberships(1)

Independence

Audit

Comp

Finance

Nom   /Gov

Brian P. Anderson

Former Chief Financial Officer, OfficeMax, Inc.

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●

Bryce Blair Non-Executive Chairman

Former Chairman of the Board and Chief Executive Officer, AvalonBay Communities, Inc.

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Richard W. Dreiling

Former Chairman of the Board and Chief Executive Officer, Dollar General Corporation

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●

●

Thomas J. Folliard

Non-Executive Chairman of the Board and Former President and Chief Executive Officer, CarMax, Inc.

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●

●

Cheryl W. Grisé

Former Executive Vice President, Northeast Utilities (now known as Eversource Energy)

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●

André J. Hawaux

Former Executive Vice President, Chief Financial Officer and Chief Operating Officer, Dick’s Sporting Goods, Inc.

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●

●

Ryan R. Marshall

President and Chief Executive Officer, PulteGroup, Inc.

2

●

John R. Peshkin

Founder and Managing Partner, Vanguard Land, LLC

2

●

Scott F. Powers

Former President and Chief Executive Officer, State Street Global Advisors

2

●

●

William J. Pulte

Chief Executive Officer, Pulte Capital Partners LLC

2

●

●

(1) These columns show the current committee memberships of the director nominees. Assuming that each of the nominees is re-elected at the Annual Meeting, Mr. Powers will become the Chair of the Compensation and Management Development Committee, and Mr. Anderson will serve on the Finance and Investment Committee in lieu of the Nominating and Governance Committee.

ii

Board Nominee Highlights

Governance Highlights

PulteGroup has a long-standing commitment to strong corporate governance and throughout the years has evolved its governance framework to align with best practices. In particular, we believe that the following corporate governance features help us best serve the interests of our shareholders:

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Executive Compensation Highlights

Our executive compensation program is designed to reward executives for producing sustainable growth and improving shareholder returns consistent with our strategic plan and to align compensation with the long-term interests of our shareholders. In accordance with this pay for performance philosophy, PulteGroup compensates its named executive officers using a mix of cash and equity compensation elements with an emphasis on short-term and long-term performance:

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PulteGroup is also committed to having strong governance standards with respect to our executive compensation program, policies and practices. Consistent with this focus, we maintain the following policies and practices that we believe demonstrate our commitment to executive compensation best practices.

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TABLE OF CONTENTS

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PROXY STATEMENT

The Board of Directors of PulteGroup, Inc. (“PulteGroup,” the “Company,” “we” or “our”) is soliciting proxies on behalf of the Company to be used at the Annual Meeting of Shareholders (the “Annual Meeting”) to be held on May 10, 2018, at 12:30 P.M., Eastern Time, at 3350 Peachtree Road Northeast, Atlanta, Georgia 30326. In accordance with rules adopted by the Securities and Exchange Commission (the “SEC”), the Company is making this Proxy Statement and the Company’s Annual Report on Form 10-K (“Annual Report”) available to our shareholders electronically via the internet. In addition, the Company is using the SEC’s Notice and Access Rules to provide shareholders with more options for receipt of these materials. Accordingly, on or about March 28, 2018, the Company will be mailing a Notice of Internet Availability of Proxy Materials and Notice of Annual Meeting (the “Notice”) to our shareholders containing instructions on how to access this Proxy Statement and the Company’s Annual Report on the internet, how to vote online or by telephone, and how to receive paper copies of the documents and a proxy card.

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BOARD OF DIRECTORS INFORMATION

Board of Directors Qualifications and Attributes

During 2017 PulteGroup’s Board of Directors (the “Board” or “Board of Directors”) conducted a thorough review of the skills and experiences which should be represented on the Board. As a result of the review, the Board developed the following matrix which sets forth the collective experiences and qualifications of the directors that will continue to drive effective oversight of the Company.

In addition to these competencies and experiences, the Board also believes that integrity, business judgment, leadership skills, dedication and collaboration are personal attributes that are vital to the Board’s ability to effectively oversee the Company and act in the best interests of the Company’s shareholders. More detail regarding the Company’s individual directors is provided below. In addition to these personal characteristics and qualifications, PulteGroup highly values the collective experience and qualifications of the directors. PulteGroup believes that the diverse set of collective experiences, viewpoints and perspectives of its directors results in a Board with the commitment and energy to advance the interests of PulteGroup’s shareholders.

In March 2018, the Nominating and Governance Committee amended its charter to express the Nominating and Governance Committee’s commitment to the inclusion of diverse groups (including, where appropriate, diversity of age,

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gender, race, ethnicity and professional experience), knowledge and viewpoints in its selection of Board nominees. When adding new Board members or filling vacancies, the Nominating and Governance Committee will conduct its search consistent with its amended charter and our Corporate Governance Guidelines.

Independence

Under the Company’s Corporate Governance Guidelines, which are available to shareholders at http://www.pultegroupinc.com/investors/corporate-governance/guidelines/default.aspx, a substantial majority of the members of our Board must be independent. The Board has adopted categorical independence standards to assist the Nominating and Governance Committee in determining director independence, which standards either meet or exceed the independence requirements of the NYSE corporate governance standards. Under these standards, no director can qualify as independent unless (i) the Board affirmatively determines that the director has no material relationship with the Company, directly or as an officer, shareholder or partner of an organization that has a relationship with the Company, and (ii) the director meets the following categorical standards:

In addition, Audit Committee members may not have any direct or indirect financial relationship whatsoever with the Company other than as directors.

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The Board considered all relevant facts and circumstances in assessing director independence, including the Elliott Agreement and the Pulte Agreement (each as defined and described below in the section entitled “Proposal One: Election of Directors”). In connection with this assessment, the Board affirmatively determined that Brian P. Anderson, Bryce Blair, Richard W. Dreiling, Thomas J. Folliard, Joshua Gotbaum, Cheryl W. Grisé, André J. Hawaux, Patrick J. O’Leary, John R. Peshkin, James J. Postl, Scott F. Powers and William J. Pulte are independent within the meaning of the Company’s categorical standards and the NYSE listing standards. The Board further determined that Richard J. Dugas, Jr., who was a PulteGroup employee through the Company’s 2017 Annual Meeting of Shareholders, and Ryan R. Marshall, who is a current PulteGroup employee, are not independent within the meaning of the Company’s categorical standards and the NYSE listing standards.

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Our Restated Articles of Incorporation, as amended, require that we have at least three, but no more than 15, directors. The exact number of directors is set by the Board and is currently twelve. All directors will be elected on an annual basis for one-year terms. The twelve directors comprising the Board, all of whose terms are expiring at the Annual Meeting, are Brian P. Anderson, Bryce Blair, Richard W. Dreiling, Thomas J. Folliard, Joshua Gotbaum, Cheryl W. Grisé, André J. Hawaux, Ryan R. Marshall, Patrick J. O’Leary, John R. Peshkin, Scott F. Powers and William J. Pulte. Messrs. Gotbaum and O’Leary have not been nominated for re-election as directors at the Annual Meeting. As a result, as of the Annual Meeting, the size of the Board will be automatically reduced from twelve members to ten members.

On July 20, 2016, the Company entered into a letter agreement (the “Elliott Agreement”) with Elliott Associates, L.P., a Delaware limited partnership, and Elliott International, L.P., a Cayman Islands limited partnership. Pursuant to the Elliott Agreement, the Board of Directors appointed Messrs. Gotbaum, Powers and Peshkin to the Board of Directors effective as of July 20, 2016. On September 8, 2016, the Company entered into a letter agreement (the “Pulte Agreement”) with William J. Pulte (the grandson of the founder of the Company), William J. Pulte (the founder of the Company), the William J. Pulte Trust dtd 01/26/90 and the Joan B. Pulte Trust dtd 01/26/90. Pursuant to the Pulte Agreement, the Board of Directors appointed Mr. Pulte (the grandson of the founder of the Company) to the Board of Directors as of September 8, 2016.    In addition, Ryan. R. Marshall, PulteGroup’s President and Chief Executive Officer, was recommended to the Board of Directors by the CEO Search Committee of the Board in connection with his appointment to that position on September 8, 2016.

The By-laws of the Company provide that a nominee for director at the Annual Meeting shall be elected by the affirmative vote of a majority of the votes cast with respect to that director’s election. A majority of votes cast means that the number of votes cast “for” a director’s election exceeds the number of votes cast “against” that director’s election (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election). If a nominee for director, who is an incumbent director, is not elected, the director shall promptly tender his or her resignation to the Board of Directors. The Nominating and Governance Committee will make a recommendation to the Board of Directors as to whether to accept or reject the resignation of such incumbent director, or whether other action should be taken. The Board of Directors shall act on the resignation, taking into account the committee’s recommendation, and publicly disclose (by a press release, a filing with the Securities and Exchange Commission or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision within 90 days following certification of the election results. The director who tenders his or her resignation will not participate in the recommendation of the committee or the decision of the Board of Directors with respect to his or her resignation.

The ten directors listed below are the nominees to serve a one-year term expiring at the Company’s 2019 Annual Meeting of Shareholders, and each has agreed to serve the one-year term for which he or she has been nominated, if elected. Please see below for a description of the occupations and recent business experience of all director nominees. In addition, the specific experience, qualifications, attributes or skills that led the Nominating and Governance Committee to the conclusion that each of the director nominees should serve as a director of the Company are included in the descriptions below.

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7

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       The Board of Directors recommends that shareholders vote “FOR” the election of these ten nominees.

If a nominee is unable to stand for election, the Board may reduce the number of directors or choose a substitute. If the Board chooses a substitute, shares represented by proxies will be voted for the substitute. If a director retires, resigns, dies or is unable to serve for any reason, the Board may reduce the number of directors or appoint a new director to fill the vacancy. The new director would serve until the Company’s next Annual Meeting of Shareholders.

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COMMITTEES OF THE BOARD OF DIRECTORS

The Board has four standing committees to facilitate and assist the Board in the execution of its responsibilities. The committees are currently the Audit Committee, Compensation and Management Development Committee, Nominating and Governance Committee and Finance and Investment Committee. Charters for all of these committees are available on the Company’s website at www.pultegroupinc.com. The table below shows current membership for each of the standing Board committees.

Director Name

Audit Committee†

Compensation and Management Development Committee†

Nominating and Governance Committee†

Finance and Investment Committee†

Brian P. Anderson

●

Bryce Blair*

Richard W. Dreiling

●

●

Thomas J. Folliard

●

●

Joshua Gotbaum

●

●

Cheryl W. Grisé

●

André J. Hawaux

●

●

Ryan R. Marshall

●

Patrick J. O’Leary

●

John R. Peshkin

●

Scott F. Powers

●

●

William J. Pulte

●

●

Chair

^†       This chart shows the current committee memberships. Assuming that each of the nominees is re-elected the Annual Meeting, Mr. Powers will become the Chair of the Compensation and Management Development Committee, and Mr. Anderson will serve on the Finance and Investment Committee in lieu of the Nominating and Governance Committee.

Audit Committee

The Audit Committee met nine (9) times in 2017. The Audit Committee represents and assists the Board with the oversight of the integrity of the Company’s financial statements and internal controls, the performance of the Company’s internal audit function, the annual independent audit of the Company’s financial statements and the independent auditor’s engagement, qualifications and independence, the Company’s compliance with legal and regulatory requirements, and the evaluation of certain enterprise risk issues. The Audit Committee is also responsible for preparing the report of the Audit Committee required to be included in the Company’s annual proxy statement.

The Audit Committee is responsible for selecting (subject to ratification by our shareholders) the independent auditor as well as setting the compensation for and overseeing the work of the independent auditor and approving audit services to be provided by the independent auditor. Brian P. Anderson currently serves on the audit committee of more than three public companies. The Board has determined that Mr. Anderson’s simultaneous service on the audit committees of more than three public companies will not impair his ability to serve effectively on the Company’s audit committee. The Board has determined that each of the members of the Audit Committee is independent within the meaning of the Company’s categorical standards and the applicable NYSE and SEC rules and financially literate as defined by the NYSE rules, and that Brian P. Anderson, Thomas J. Folliard, Joshua Gotbaum, André J. Hawaux and John R. Peshkin are audit committee financial experts for purposes of the SEC’s rules.

Compensation and Management Development Committee

The Compensation and Management Development Committee met seven (7) times in 2017. The Compensation and Management Development Committee is responsible for the review, approval and administration of the compensation and benefit programs for the Chief Executive Officer and the other named executive officers. It also reviews and makes

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recommendations regarding the Company’s general compensation philosophy and incentive plans and certain other compensation plans; reviews the Company’s leadership development programs and initiatives; and discusses performance, leadership development and succession planning for key officers with the Chief Executive Officer, as appropriate. The Board has determined that each of the members of the Compensation and Management Development Committee is independent within the meaning of the Company’s categorical standards and the NYSE rules.

Mr. Patrick J. O’Leary is currently the Chair of the Compensation and Management Development Committee. Mr. O’Leary works with Mr. James R. Ellinghausen, the Company’s Executive Vice President, Human Resources, to establish meeting agendas and determine whether any members of PulteGroup’s management or outside advisors should attend meetings. The Compensation and Management Development Committee also meets regularly in executive session. At various times during the year at the request of the Compensation and Management Development Committee, Ryan R. Marshall, the President and Chief Executive Officer of the Company; Robert T. O’Shaughnessy, the Executive Vice President and Chief Financial Officer of the Company; and Todd N. Sheldon, the Executive Vice President, General Counsel and Corporate Secretary of the Company, may attend Compensation and Management Development Committee meetings, or portions of Compensation and Management Development Committee meetings, to provide the Compensation and Management Development Committee with information regarding the Company’s operational performance, financial performance or other topics requested by the Compensation and Management Development Committee to assist it in making its compensation decisions. As noted above, assuming that each of the nominees is re-elected at the Annual Meeting, Mr. Scott Powers will become the Chair of the Compensation and Management Development Committee immediately following the Annual Meeting.

The Chief Executive Officer annually reviews the performance of each member of senior management (other than our Chief Executive Officer’s or our former Executive Chairman’s performance, whose performance is reviewed by the Compensation and Management Development Committee). Recommendations based on these reviews, including salary adjustments, annual bonuses, long-term incentives and equity grants, are presented to the Compensation and Management Development Committee. Decisions regarding salary adjustments, annual bonuses, long-term incentives and equity grants for our Chief Executive Officer and our former Executive Chairman are made by the Compensation and Management Development Committee. All decisions for 2017 made with respect to the executives listed in the Summary Compensation Table (other than the Chief Executive Officer and our former Executive Chairman) were made after deliberation with Mr. Marshall.

The Compensation and Management Development Committee is also responsible for overseeing the development of the Company’s succession plan for the President and Chief Executive Officer and other key members of senior management, as well as the Company’s leadership development programs.

The Compensation and Management Development Committee receives and reviews materials provided by the Compensation and Management Development Committee’s consultant and management. These materials include information that the consultant and management believe will be helpful to the Compensation and Management Development Committee, as well as materials the Compensation and Management Development Committee specifically requests.

The Compensation and Management Development Committee has the authority to engage its own outside compensation consultant and any other advisors it deems necessary. Since 2003, the Compensation and Management Development Committee has engaged Pearl Meyer & Partners (“Pearl Meyer”) to act as its independent consultant. Pearl Meyer regularly provides the Compensation and Management Development Committee with information regarding market compensation levels, general compensation trends and best practices. The Compensation and Management Development Committee also regularly asks Pearl Meyer to opine on the reasonableness of specific pay decisions and actions for the named executive officers, as well as the appropriateness of the design of the Company’s executive compensation programs.

The activities of Pearl Meyer are directed by the Compensation and Management Development Committee, although Pearl Meyer may communicate with members of management, as appropriate, to gather data and prepare analyses as requested by the Compensation and Management Development Committee. During 2017, the Compensation and Management Development Committee asked Pearl Meyer to review market data and advise the Committee on setting executive compensation and the competitiveness and reasonableness of the Company’s executive compensation program; review and advise the Compensation and Management Development Committee regarding the Company’s pay for performance, equity grant and dilution levels, each as relative to the Company’s peers; review and advise the Compensation and Management Development Committee regarding regulatory, disclosure and other technical matters;

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and review and advise the Compensation and Management Development Committee regarding the Company’s compensation risk assessment procedures. The Compensation and Management Development Committee also asked Pearl Meyer to provide opinions on named executive officer pay decisions.

In 2017, Pearl Meyer did not provide any other services to the Company. The Compensation and Management Development Committee assessed the independence of Pearl Meyer pursuant to SEC rules and concluded that Pearl Meyer’s work for the Compensation and Management Development Committee does not raise any conflict of interest.

The Compensation and Management Development Committee has determined that Pearl Meyer is independent because it does no work for the Company other than that requested by the Compensation and Management Development Committee. The Chair of the Compensation and Management Development Committee reviews the consultant’s invoices, which are paid by the Company.

Nominating and Governance Committee

The Nominating and Governance Committee met seven (7) times in 2017. The Nominating and Governance Committee establishes criteria for the selection of new members of the Board of Directors and makes recommendations to the Board based on qualified identified individuals, including any qualified candidates nominated by shareholders, as described in “Director Nomination Recommendations” below. As noted above, in March 2018, the Nominating and Governance Committee amended its charter to express the Nominating and Governance Committee’s commitment to the inclusion of diverse groups (including, where appropriate, diversity of age, gender, race, ethnicity and professional experience), knowledge and viewpoints in its selection of Board nominees.

The Nominating and Governance Committee is also responsible for matters related to the governance of the Company and for developing and recommending to the Board the criteria for Board membership, the selection of new Board members and the assignment of directors to the committees of the Board. The Nominating and Governance Committee assures that a regular evaluation is conducted of the performance, qualifications, and integrity of the Board and the committees of the Board. Please see “Corporate Governance—Board Assessments” for further information regarding the regular evaluations. The Nominating and Governance Committee also reviews and makes recommendations with respect to the compensation of members of the Board. The Nominating and Governance Committee is also responsible for reviewing the Company’s Environmental Health & Safety Policies and assessing and monitoring the Company’s enterprise risk management initiatives. The Board has determined that each of the members of the Nominating and Governance Committee is independent within the meaning of the Company’s categorical standards and the NYSE rules.

Finance and Investment Committee

The Finance and Investment Committee met seven (7) times in 2017. The Finance and Investment Committee reviews all aspects of the Company’s policies that relate to the management of the Company’s financial affairs. The Finance and Investment Committee also reviews the Company’s long-term strategic plans and annual budgets, capital commitments budget, certain land acquisition and sale transactions, and the Company’s cash needs and funding plans.

Board Meeting Information

The Board of Directors held a total of six (6) meetings in 2017. During 2017, each director attended at least 75% of the aggregate number of meetings of the Board of Directors and of the committees on which such director served that were held during the period that such director served as a member of the Board of Directors and as a member of such committees.

PulteGroup encourages its directors to attend each of the Company’s Annual Meeting of Shareholders, and all of our directors serving on the date of last year’s Annual Meeting of Shareholders attended that meeting.

Throughout the year, PulteGroup held regularly scheduled executive sessions of its non-management directors without management participation. In addition, in 2018, PulteGroup will hold at least one executive session of its non-management directors without the participation of management. Since the Company’s 2017 Annual Meeting of Shareholders, Bryce Blair, our Non-Executive Chairman, has presided at these executive sessions. Provided that Mr. Blair is re-elected at the Annual Meeting, he will continue to preside over the executive sessions as the Non-Executive Chairman (as discussed further below).

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CORPORATE GOVERNANCE

Recent Developments

The Board continues to take steps that we believe improve our corporate governance and position our Company for long-term success. Recently, these steps have included:

Governance Guidelines; Code of Ethical Business Conduct; Code of Ethics

The Board has adopted Corporate Governance Guidelines, which reflect the principles by which PulteGroup operates. The guidelines address an array of governance issues and principles including: director independence, committee independence, management succession, annual Board evaluations, director nominations, director age limitations, the role of the Chairman or Lead Director, and executive sessions of the independent directors. PulteGroup’s Governance Guidelines are available for viewing on our website at www.pultegroupinc.com. The Board also has adopted a Code of Ethical Business Conduct, which applies to all directors and employees and a Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Controller and other senior officers. The Code of Ethical Business Conduct and the Code of Ethics are also available on the Company’s website, and the Company intends to include on its website any waivers of its Code of Ethical Business Conduct that relate to executive officers and directors as well as any amendments to, or waivers from, a provision of its Code of Ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K.

Board Leadership

Our Corporate Governance Guidelines currently contemplate that the independent directors will annually designate one of the independent directors to serve as Non-Executive Chairman for a one-year term. As noted above, as of the Company’s 2017 Annual Meeting of Shareholders, the Board appointed Bryce Blair to succeed Richard J. Dugas as Chairman of the Board, and since the Company’s 2017 Annual Meeting of Shareholders, Mr. Blair has served as the Non-Executive Chairman. Provided that Mr. Blair is re-elected at the Annual Meeting, as an independent director, he would continue to serve as Non-Executive Chairman.

Since Mr. Blair’s appointment as the Non-Executive Chairman, he has performed duties similar to that of our former Lead Director and has worked with the President and Chief Executive Officer to ensure that the Board discharges its responsibilities, has procedures in place to enable it to function independently of management and clearly understands the respective roles and responsibilities of the Board and management. In addition, the Non-Executive Chairman’s duties have included convening and chairing regular executive session meetings of the non-management directors and, as appropriate, providing prompt feedback to the President and Chief Executive Officer; coordinating and developing the agenda for executive sessions of the independent directors; convening meetings of the independent directors if necessary; coordinating feedback to the President and Chief Executive Officer on behalf of the independent directors regarding business issues and management; providing final approval, after consultation with the President and Chief Executive Officer, as to the agendas for meetings of the Board and informational needs associated with those agendas and presentations; performing such other duties as may be necessary for the Board to fulfill its responsibilities or as may

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be requested by the Board as a whole or by the non-management directors; serving as the designated spokesperson for the Board when it is appropriate for the Board to comment publicly on any matter; and being available for consultation and communication if requested by the Company’s major shareholders.

The Board recognizes that no single leadership model is right for all companies at all times, and as appropriate, the Board will continue to review its leadership model to determine the correct leadership structure for the Company.

Board Role in Risk Oversight

The Board’s involvement in risk oversight includes both formal and informal processes and involves the Board and committees of the Board.

On an annual basis, the Board or selected committees of the Board undertake a formal enterprise risk assessment during which the principal risks facing PulteGroup and associated responses are evaluated. In addition to the formal assessment, the Board and committees of the Board are also involved in risk oversight on a more informal basis at regular Board and committee meetings. The Audit Committee receives materials on a frequent basis to address the identification and status of risks to the Company, including financial risks, litigation claims and risks, and cybersecurity risks. At meetings of the full Board, these risks are identified to Board members, and the Chair of the Audit Committee reports on the activities of the Audit Committee regarding risk analysis. In addition, two times per year, the Audit Committee receives a report from PulteGroup’s Ethics Committee regarding current hotline activities and associated responses. The other committees of the Board also consider and address risk as they perform their respective responsibilities, and such committees report to the full Board from time to time as appropriate, including whenever a matter rises to a material or enterprise level risk. The Board also receives regular financial and business updates from senior management, which involve detailed reports on financial and business risks facing PulteGroup when applicable.

Board Assessments

Each year, the Nominating and Governance Committee leads a confidential assessment process under which our Board and its committees conduct self-assessments. Additionally, every other year, the Nominating and Governance Committee leads a confidential assessment process under which each individual director completes a formal self-assessment and an assessment of each other director. The following is a summary of the assessment process:

In 2017, the Board, committee and director assessments coincided with the development of the skills matrix referenced previously on page 3. Our Board intends to review the matrix for appropriate revisions at least annually.

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Available information about PulteGroup

The following information is available on PulteGroup’s website at www.pultegroupinc.com and in print for any shareholder upon written request to our Corporate Secretary:

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DIRECTOR NOMINATION RECOMMENDATIONS

The Nominating and Governance Committee does not have a single method for identifying director candidates but will consider candidates suggested by a wide range of sources, including candidates recommended by shareholders. The Committee reviews the qualifications of various persons to determine whether they might make good candidates for consideration for membership on the Board. The Nominating and Governance Committee will review all proposed nominees, including those proposed by shareholders, in accordance with its charter and PulteGroup’s Corporate Governance Guidelines. The Nominating and Governance Committee considers the experience and skills for potential candidates adopted by the Board and summarized in the matrix on page 3. In addition, the Nominating and Governance Committee will review the person’s judgment, experience, qualifications, independence, understanding of PulteGroup’s business or other related industries and such other factors as the Nominating and Governance Committee determines are relevant in light of the needs of the Board and PulteGroup.

The Board also believes that diversity is an important goal and looks for potential candidates who will help ensure that the Board has the benefit of a wide range of attributes. As noted above, in March 2018, the Nominating and Governance Committee amended its charter to express the Nominating and Governance Committee’s commitment to the inclusion of diverse groups (including, where appropriate, diversity of age, gender, race, ethnicity and professional experience), knowledge and viewpoints in its selection of Board nominees.

The Nominating and Governance Committee will select qualified candidates and review its recommendations with the Board, which will decide whether to invite the candidate to be a nominee for election to the Board.

You may recommend a person to be nominated for director by submitting a written proposal by certified mail, return receipt requested, or by recognized overnight courier, to Todd N. Sheldon, Corporate Secretary, PulteGroup, Inc., 3350 Peachtree Road NE, Suite 150, Atlanta, Georgia 30326. Shareholders wishing to directly nominate a candidate for election as a director at next year’s Annual Meeting of Shareholders must deliver written notice to PulteGroup at the above address not later than 60 days prior to the date of next year’s Annual Meeting of Shareholders (unless public disclosure of the date of such meeting is made less than 70 days before such meeting, in which case notice must be received within 10 days following such public disclosure), and the required notice must include the information and documents set forth in the Company’s By-laws.

In addition, the Company’s By-laws permit proxy access. The proxy access By-law provision permits a shareholder, or a group of up to 20 shareholders, owning 3% or more of the Company’s outstanding common shares continuously for at least three years to nominate and include in the Company’s proxy materials director nominees constituting up to two individuals or 20% of the Board, whichever is greater, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in the Company’s By-laws. Shareholders wishing to directly nominate a candidate for election as a director at next year’s Annual Meeting of Shareholders and have such nomination included in the Company’s proxy materials must deliver written notice to PulteGroup at the above address not later than 120 days nor more than 150 days in advance of the date the Company’s proxy statement was released to security holders for the Annual Meeting (unless the date of such meeting has been changed by more than 30 days from the date contemplated at this time), and the required notice must include the information and documents set forth in the By-laws.

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2017 DIRECTOR COMPENSATION

The table below shows compensation for the Company’s non-employee directors for the fiscal year ended December 31, 2017. Ryan R. Marshall, our President and Chief Executive Officer, and also a director of the Company, and Richard J. Dugas, Jr., the Company’s former Executive Chairman, received no additional compensation for their services as directors of the Company during 2017. The compensation received by Messrs. Marshall and Dugas as employees of the Company is shown in the 2017 Summary Compensation Table set forth in this Proxy Statement.

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Director Compensation

The Nominating and Governance Committee reviews the compensation of the Company’s non-employee directors. For 2017, the Nominating and Governance Committee did not make any changes to the non-employee director compensation program, other than setting a retainer fee for the position of Non-Executive Chairman. During 2017, non-employee directors received the following compensation for service as members of the Board of Directors and as members of Board committees:

For his service during 2017, Mr. Postl received prorated annual cash and Lead Director retainer fees based on the fees noted above.

For his service during 2017, Mr. Blair received an annual cash retainer fee, a prorated Committee chair retainer fee for his service as the Chair of the Finance and Investment Committee through the Company’s 2017 Annual Meeting of Shareholders and a prorated Non-Executive Chairman retainer fee based on the fees noted above.

Director Deferred Compensation

In 2017, non-employee directors were entitled to defer all or a portion of their cash and equity compensation. Deferred cash payments were credited with interest at a rate equal to the five year U.S. treasury rate, plus 2%. Under the “Deferred Compensation Plan for Non-Employee Directors,” the payment of director cash fees may be deferred for up to eight years, and directors may elect to receive their deferred fees in a lump sum or in equal annual installments over a period not to exceed eight years. In the event of the director’s departure either before or after the commencement of a deferral period, such director’s deferred fees will be paid in a lump sum payment. Under the terms of the plan, all deferred equity will be distributed to the director upon his or her departure from the Board.

Directors who also are our employees do not receive any of the compensation described above.

Equity Ownership Guidelines

Each member of the Board of Directors is expected to maintain an equity investment in the Company equal to at least five times the annual cash retainer, which must be achieved within five years of the director’s initial election to the Board. The holdings that may be counted toward achieving the equity investment guidelines include outstanding share awards or units, shares obtained through stock option exercises, shares owned jointly with or separately by the director’s spouse and shares purchased on the open market. Outstanding stock options do not count toward achieving the equity investment guidelines. As of March 16, 2018, all members of the Board of Directors have met or, within the applicable period, are expected to meet, these share ownership guidelines.

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (our “CD&A”) provides an overview of our executive compensation program for 2017 and our executive compensation philosophies and objectives. This CD&A is divided into five sections:

EXECUTIVE SUMMARY

Overview

For PulteGroup, 2017 was a year of strong financial performance through disciplined execution. In his first full year as Chief Executive Officer, Ryan Marshall helped PulteGroup navigate a competitive housing market, severe weather events and erratic commodity and labor markets to achieve double digit growth in new orders and home sale revenue. We believe that PulteGroup’s leadership within the homebuilding industry is on a solid foundation and poised for sustained growth in the future.

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Additional highlights of our 2017 performance include:

We believe that our ability to deliver consistent results over time is reflected in our total shareholder return, which was 83.4%, 62.9% and 96.4% for the one-, three- and five-year periods ending on December 31, 2017, respectively. For additional information see “Return to Shareholders” on page 23 of this Proxy Statement.

We believe our compensation philosophy and execution supports PulteGroup’s strategy, which has been delivering strong returns since we began implementation in 2011. Our compensation planning is designed to focus executives on balancing short-term objectives against long-term priorities, to align executive and shareholder interests, and to attract and retain the leadership needed to continue to deliver strong results. Pay decisions were made in the context of our financial performance relative to our goals, while considering external factors and the actions management has taken to strengthen PulteGroup’s position for the future.

For 2017, at target, approximately 84% of Mr. Marshall’s pay was at risk and subject to attainment of specific performance goals or fluctuations in our stock price, as demonstrated by the chart below:

CEO 2017 Total Direct Compensation

For additional information, see “Pay for Performance” on page 24 of this Proxy Statement.

For 2017 performance, the Compensation and Management Development Committee of our Board of Directors (the “Committee”) approved an annual incentive payment of approximately $1.6 million for Mr. Marshall, which represented a payout at approximately 119% of target. We believe the payout level resulted from significant progress in the implementation of PulteGroup’s strategy, with continued growth in all buyer groups we serve, improvements in build quality measurements, and continued focus on cost-containment – all while generating cash flows to fund future growth. In addition, the Committee noted continued increases in employee engagement, and major steps taken to develop and strengthen senior management.

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For 2018, the Committee made the following changes to Mr. Marshall’s compensation:

These changes to Mr. Marshall’s compensation reflect, among other things, the Committee’s acknowledgement of Mr. Marshall and the Company’s strong performance in 2017, a desire to align Mr. Marshall’s compensation more closely with the competitive market, and an emphasis on tying a greater portion of Mr. Marshall’s overall compensation to profitable growth with the additional pre-tax income growth measure. See “2018 Compensation Decisions” on page 39 of this Proxy Statement for more information regarding 2018 compensation adjustments.

Return to Shareholders

The following charts illustrate total shareholder return (“TSR”) over the last one-, three- and five-year periods, including our quarterly dividend. As illustrated in these charts, we created significant value for shareholders over the last one-, three- and five-year periods.

Total Shareholder Return*

*Share price appreciation plus dividends, with dividends reinvested quarterly.

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The following chart shows how a $100 investment in the Company’s common shares on December 31, 2012 would have grown to $196.37 on December 31, 2017, with dividends reinvested quarterly. The chart also compares the TSR on the Company’s common shares to the same investment in the S&P 500 Index and the Company’s 2017 compensation peer group (whether or not the peer company was included in the group for the entire period, except for CalAtlantic Group, Inc. because it did not exist until 2015, see page 28) over the same period, with dividends reinvested quarterly. We believe this chart illustrates the significant value created for shareholders over the five-year period as compared to our compensation peer group as well as the S&P 500 Index.

Comparison of Five Year Total Shareholder Return*

*Assumes $100 invested on December 31, 2012, and the reinvestment of dividends.

Pay for Performance

Our executive compensation program is designed to reward executives for producing sustainable growth and improving shareholder returns consistent with PulteGroup’s strategy and to align compensation with the long-term interests of our shareholders. The Committee strongly believes that executive compensation—both pay opportunities and pay actually realized—should be at-risk and tied to Company performance relative to the Company’s goals. For example, beginning in 2014, the Company has incorporated a TSR performance metric into its annual equity grant. In addition, the Committee designed the 2017 executive compensation program so that variable pay elements (annual incentive awards, restricted share units and performance-based awards) constitute a significant portion of the executive compensation awarded, determined at target levels. The following charts demonstrate the variable pay elements as compared to the targeted annual compensation of our named executive officers other than Mr. Dugas. These charts demonstrate that the variable pay elements comprised at least 84% of the targeted annual compensation for our President and Chief Executive Officer and, on average, 76% of the targeted annual compensation for the other named executive officers, excluding Mr. Dugas, who left the Company in May 2017.

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CEO 2017 Total Direct Compensation

NEO 2017 Total Direct Compensation¹

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Key Executive Compensation Decisions and Actions

We are committed to having strong governance standards with respect to our executive compensation program, policies and practices. Consistent with this focus, we maintain the following policies and practices that we believe demonstrate our commitment to executive compensation best practices.

Shareholder Feedback

In its compensation review process, the Committee considers whether our executive compensation and benefits program serves the interests of our shareholders. In that respect, as part of its on-going review of our executive compensation program, the Committee considered the approval by approximately 95% of the votes cast for the Company’s “say on pay” vote at our 2017 Annual Meeting of Shareholders. The Committee was pleased with this favorable outcome and interpreted this level of support as an endorsement by our shareholders of our executive compensation program and policies and did not make any changes to our executive compensation program in response to the 2017 “say on pay” vote. The Committee values continuing and constructive feedback from our shareholders on compensation, and Messrs. Marshall and O’Shaughnessy, among others, have discussed the Company’s executive compensation program with various shareholders and have shared this shareholder feedback with the Committee. The Committee intends to continue to monitor our executive compensation program and engage with shareholders regarding such program.

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Named Executive Officers

For 2017, our named executive officers were:

*Mr. Ellinghausen previously announced his retirement as the Company’s Executive Vice President, Human Resources, to be effective March 31, 2018.

**Mr. Sheldon joined the Company on March 20, 2017.

***On September 8, 2016, the Company entered into a Transition Agreement (the “Transition Agreement”) with Richard J. Dugas, Jr., then the Chairman and Chief Executive Officer of the Company, in connection with Mr. Dugas’ retirement from the Company. Pursuant to the terms of the Transition Agreement, Mr. Dugas retired from his position as Chief Executive Officer of the Company, effective September 8, 2016, and retired from his position as Executive Chairman of the Company, effective at the Company’s 2017 Annual Meeting of Shareholders on May 3, 2017. Although Mr. Dugas is a named executive officer pursuant to the relevant SEC rules, due to the unique nature of his compensation arrangements, his compensation will be summarized separately below. Please see the “Executive Chairman Compensation Arrangements” section below for a discussion of the compensation awarded to Mr. Dugas pursuant to the Transition Agreement.

ESTABLISHING AND EVALUATING EXECUTIVE COMPENSATION

Executive Compensation Philosophy

To align the Company’s incentive compensation program with the Company’s overall executive compensation philosophy, the Committee has adopted the following compensation philosophy and guiding principles:

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Key Factors in Setting 2017 Compensation

In establishing and evaluating our 2017 executive compensation program, the Committee, in consultation with our Chief Executive Officer, considered the following key factors:

Market Comparisons

While the Committee considers relevant market pay practices when setting executive compensation, it does not believe that it is appropriate to establish compensation levels based only on market practices. The Committee believes that compensation decisions are complex and require a deliberate review of Company performance and peer compensation levels, as well as the overall business environment and the role and contributions of each individual. Accordingly, the review of peer information is one of many factors the Committee considers in determining compensation levels. For each element of compensation, the Committee reviews market data (i.e., peer group and survey data) to evaluate target compensation levels, while also considering the expanded responsibilities of some of our named executive officers as compared to the peer group, revenue size relative to the peer group, our historical compensation practices, the overall mix of our compensation elements being weighted more heavily toward long-term and equity-based compensation, management ownership and financial performance. Other factors that influence the amount of compensation awarded include an individual’s experience and past performance inside or outside the Company, compensation history, role and responsibilities within the Company, tenure with the Company and associated institutional knowledge, long-term potential with the Company, contributions derived from creative and innovative thinking and leadership and industry expertise.

The Committee believes that the Company’s peer group should reflect the industry in which the Company competes for business and executive talent. Accordingly, the Company’s peer group includes companies meeting the following criteria: (i) companies within, or operating in an industry similar to, the home-building industry and (ii) companies of similar size in terms of revenue or market capitalization (1/2 to 2 times the Company’s revenue and market capitalization). In evaluating companies to include in our peer group, the Committee also reviewed the say-on-pay history for each of the companies to understand the alignment of the executive compensation programs at those companies with the interests and views of the shareholders of such companies. The peer group used for evaluating 2017 compensation decisions consisted of the companies below, which is the same peer group that was used for evaluating 2016 compensation decisions:

In addition to reviewing compensation practices among the compensation peer group, the Committee believes it is important to review compensation practices within the general industry. The Company participates in and purchases a number of compensation surveys. With the assistance of Pearl Meyer, the Committee reviews a blend of general industry and peer group survey data in establishing target compensation levels and evaluating whether our compensation policies are in line with market data. The 2017 survey data was compiled from the following general industry compensation surveys: Mercer Human Resource Consulting’s US Mercer Benchmark Database (MBD) Executive (which has approximately 2,600 participating companies) and Willis TowersWatson Top Management Compensation (which has approximately 115 participating companies). To assist the Committee in its review of the general industry survey data,

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Pearl Meyer extracts compensation information from the surveys with respect to companies with annual revenues ranging from $5 billion to $10 billion. The Committee believes that the compensation practices at companies of this size are most relevant to the Committee’s decision-making process.

Based on Pearl Meyer’s competitive market analysis prepared for evaluating 2017 compensation decisions, the Committee found that each element of target compensation for the named executive officers was competitive with the market data. In its analysis, Pearl Meyer noted that competitive market positioning was commensurate with the Company’s revenue positioning compared to the peer group. As noted above, the Committee also considered the expanded responsibilities of some of our named executive officers as compared to the peer group, revenue size relative to the peer group, our historical compensation practices, the overall mix of our compensation elements being weighted more heavily toward long-term and equity-based compensation, management ownership and financial performance, as well as the other individual factors noted above.

Please see the section entitled “How We Make Executive Compensation Decisions” for a discussion of the decision-making process for determining executive compensation, including the roles of the Committee and executive officers, the role of the independent compensation consultant and the use of tally sheets.

EXECUTIVE COMPENSATION PROGRAM ELEMENTS

The Committee has designed the elements of the compensation program for the named executive officers to advance the operational objectives and the long-term strategies of the Company. The following table lists the material elements of our 2017 executive compensation program. The Committee believes that the design of the Company’s executive compensation program balances fixed and variable compensation elements and provides alignment with our short and long-term financial and operational priorities and shareholder interests through the annual and long-term incentive programs. Our incentives are designed to drive overall corporate and individual performance, with compensation payouts varying from target based on actual performance against pre-established and communicated performance objectives.

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Base Salary

The Committee determines the appropriateness of executives’ base salaries by considering the responsibilities of their positions, their individual performance and tenure, a comparison to the base salary levels of executives in the compensation peer group and the general industry compensation surveys and the recommendations of Pearl Meyer. Base salary increases are considered annually and are based upon both individual and Company performance in the prior year; however, historically the Committee has not had a practice of regularly adjusting base salaries for our executive officers on an annual basis.

Mr. Sheldon’s annual base salary was determined by the Committee at the time he joined the Company in March 2017 after considering the factors noted above as well as the compensation received by Mr. Sheldon’s predecessor at the Company and a review of competitive market data for the General Counsel position. None of the other named executive officers received an adjustment to their base salary levels as compared to 2016. The difference in salary between 2016 and 2017 reflected in the 2017 Summary Compensation Table for Messrs. O’Shaughnessy, Smith, and Ellinghausen is due to our year-end payroll administration process. Their actual year-over-year annual salary rate is unchanged.

The table below sets forth the 2017 base salary level for each of our named executive officers (other than Mr. Dugas).

Annual Incentive Compensation

Under the shareholder-approved PulteGroup, Inc. 2013 Senior Management Incentive Plan (the “2013 Incentive Plan”), the Committee provides both annual and long-term incentives. The Committee adopted the 2017 Annual Incentive Program (the “Annual Program” or “2017 Annual Program”) under the 2013 Incentive Plan. Compensation under the Annual Program is intended to be a significant component of an executive’s total compensation opportunity in a given year, helping create a “pay for performance” culture. Annual Program compensation holds executives accountable and rewards them based on the Company’s performance.

The financial measures used to assess corporate performance were pre-tax income, adjusted operating margin and inventory turns, each weighted equally. Pursuant to the terms of the Annual Program, each performance goal is measured independently of the other performance goals, and payouts are determined based on the weighted average result of the performance goals, with a payout modifier of +/-10% based on certain quality-related metrics and a payout modifier of +10-20% based on pre-tax income growth goals. The Committee believes that 2017 Annual Program performance metrics were meaningful measures of 2017 performance because these metrics increase the focus of participants on profitability and are tied to our strategy with respect to shareholder value creation. In addition, the Committee approved a payout modifier with respect to quality-related metrics to further emphasize the importance of quality throughout the organization. The Committee also approved a payout modifier with respect to pre-tax income growth goals to address the expected challenges of achieving the pre-tax income target for 2017 and to recognize and incentivize the efforts to be taken to reach the pre-tax income targets. The application of the payout modifiers cannot result in a calculated payout under the Annual Program in excess of the maximum payout cap of 200% of target.

The Committee established the payout formula for performance objectives to encourage strong, focused performance. Given the economic and market conditions at the time the targets were set, the target payout level was designed to be achievable with strong management performance, while payout at the maximum level was designed to be very difficult to achieve. The 2017 Annual Program goals were set at levels consistent with the Company’s Board-approved budget and strategic operating plan. At the time the 2017 Annual Program performance metrics and requisite performance levels were established, the Committee believed that they were robust and would require a significant amount of effort by the named executive officers. In setting the Board-approved budget, the Company considered that the cost of land, construction materials and labor in the homebuilding industry is expected to continue to outpace the increase in selling prices of homes. The Committee assessed these market conditions when setting the incentive target for net operating margin in the 2017 Annual Program and noted that these market conditions required significant cost management and continued reductions in SG&A expense on the part of management in order to earn a target payout.

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The table below indicates the financial performance metrics and potential payouts with respect to the Company’s achievement of the 2017 Annual Program goals.

The table below indicates the award opportunities established by the Committee and the cash payout under the Annual Program applicable to the named executive officers (other than Mr. Dugas). The Committee determined the target payout level for each of the named executive officers included in the table based on each named executive officer’s position within the Company, each named executive officer’s historical pay levels, the incentive pay for executives at companies in our compensation peer group, the general industry compensation surveys and the recommendations of Pearl Meyer. The Committee did not change the target award opportunities compared to the 2016 target award opportunities for the named executive officers included in the table other than for Mr. Marshall and Mr. Smith. For 2017, the Committee increased Mr. Marshall’s target annual incentive opportunity from 100% of base salary to 150% of base salary to reflect his 2016 promotion to the position of President and Chief Executive Officer and considering competitive market data in relation to Mr. Marshall’s expanded roles and responsibilities as well as his individual performance. The Committee increased Mr. Smith’s target annual incentive opportunity from 100% of base salary to 125% based on Mr. Smith’s expanded roles and responsibilities and considering the competitive market data in relation to his expanded roles and responsibilities as well as his individual performance. Mr. Sheldon’s target annual incentive opportunity was determined at the time he joined the Company based on the factors noted above as well as the compensation received by Mr. Sheldon’s predecessor at the Company and a review of competitive market data for the General Counsel position.

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Long-Term Incentive Compensation

In order to provide management with incentives to achieve our long-term goals, in connection with the adoption of the 2013 Incentive Plan, the Committee adopted the LTI Program. During 2017, each named executive officer (other than Mr. Dugas) was granted an aggregate award opportunity in the form of share-settled performance-based awards under the LTI Program for the 2017-2019 performance period. During the fiscal year ended December 31, 2017, the 2017-2019, 2016-2018 and 2015-2017 performance periods were outstanding under the LTI Program. The Committee designed the LTI Program to have overlapping performance periods to address the cyclical nature of the homebuilding industry. These overlapping performance periods provide the Committee with the flexibility to address circumstances within our industry as well as the general economic and market conditions at the time the targets are set.

2017-2019 LTI Program

In 2017, the Committee approved performance-based awards for the 2017-2019 LTI Program that vest based on (i) the Company’s TSR performance relative to the TSR of the Company’s compensation peer group, (ii) the Company’s ROIC performance and (iii) the Company’s adjusted operating margin performance, with each goal weighted equally. These performance measures were deemed by the Committee to be effective long-term measures of performance reflective of our success in executing on our long-term business plan and aligning the executives’ interests with the interests of shareholders.

The Compensation Committee utilized adjusted operating margin as an element in both the Company’s Annual Program and 2017-2019 LTI Program in recognition that this measure is viewed as a core driver of the Company’s performance and shareholder value creation. In designing the Company’s executive compensation program, the Compensation Committee supplemented the adjusted operating margin in both the Annual Program and 2017-2019 LTI Program with additional performance measures in order to strike an appropriate balance with respect to incentivizing top-line growth, profitability, non-financial business imperatives and shareholder returns over both the short-term and long-term horizons.

For purposes of the 2017-2019 LTI Program, the Company is required to achieve a TSR equal to the 75th percentile of the 2017 compensation peer group over the three-year performance period in order to earn target vesting, with no payout for bottom quartile performance. The Committee established the payout formula for the ROIC and adjusted operating margin performance objectives to encourage strong, focused performance. Given the economic and market conditions at the time the targets were set, the target payout levels were designed to be achievable with strong performance, while payouts at the maximum performance levels were designed to be very difficult to achieve. Under the 2017-2019 LTI Program, ROIC and adjusted operating margin are defined as follows:

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The table below shows the award opportunities established by the Committee relating to the 2017-2019 LTI Program. The award opportunities under the 2017-2019 LTI Program did not change compared to 2016 for the named executive officers receiving awards under the 2017-2019 LTI Program other than Mr. Marshall. For the 2017-2019 LTI Program, Mr. Marshall’s target award opportunity increased from $900,000 to $1,625,000 to reflect his 2016 promotion to the position of President and Chief Executive Officer. Also, upon joining the Company, Mr. Sheldon received a long-term incentive award opportunity under the 2017-2019 LTI Program with a target value of $300,000. Mr. Sheldon’s target LTI Program opportunity was determined at the time he joined the Company based on the factors noted above as well as the compensation received by Mr. Sheldon’s predecessor at the Company and a review of competitive market data for the General Counsel position.

Actual settlement of the awards will be determined after the end of the three-year performance period based on the Company’s relative TSR, ROIC and adjusted operating margin performance during that time. Under the award agreements, the 2017-2019 LTI Program awards will be settled in Company shares, except that the award will be settled in any combination of Company shares and cash if (i) the fair market value of a Company share is less than $5.00 on December 31, 2019 (or the date of termination of employment due to death or disability) or (ii) the Company does not have a sufficient number of available shares under the Company’s stock incentive plan in effect at the time of the settlement of the award.

Award Opportunity Under 2017-2019 LTI Program

2016-2018 and 2015-2017 LTI Programs

The 2016-2018 LTI Program remains outstanding and will be settled following the completion of the three-year performance period, entirely based on the Company’s TSR performance relative to the TSR of the Company’s 2016 compensation peer group.

During 2017, the 2015-2017 LTI Program concluded, and for each of the participating named executive officers, the vesting level under the 2015-2017 LTI Program was entirely based on the Company’s TSR performance relative to the TSR of the Company’s 2015 compensation peer group.

With respect to the TSR metric under the 2015-2017 LTI Program, the Company was required to achieve a TSR equal to the 75th percentile of the 2015 TSR comparator group over the three-year performance period in order to earn target vesting, with 25th percentile relative TSR performance resulting in threshold vesting. In order to achieve the maximum vesting, the Company was required to be at least second in the TSR comparator group based on TSR performance. For purposes of assessing performance, the 2015 TSR comparator group consisted of the same companies that were included in the 2015 compensation group, excluding The Ryland Group due to its 2015 merger with Standard Pacific Corp.

For the 2015-2017 performance cycle, our relative TSR ranked 7th out of the twelve companies included in the TSR comparator group and resulted in an achievement level of 57%.

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Equity Grants

In addition to the long-term incentive opportunities granted under the Company’s LTI Program, we make annual grants of service-based equity to named executive officers as a means of furthering the linkage between an executive’s long-term incentive compensation and shareholder value. We seek to provide a significant portion of total compensation to named executive officers in the form of equity compensation. We believe that equity awards:

Our philosophy is to award equity grants to our named executive officers in amounts that reflect market data, the participant’s position, the participant’s ability to influence our overall performance, and individual performance based on a review of results during the prior year against pre-determined objectives such as operational efficiency, employee engagement, and retention and development of key talent. In addition, the Committee considers historical grant practices and market compensation levels in determining grants for individual executives.

The Committee believes that the annual equity grants to the named executive officers should be determined after a review of the Company’s financial statements for a full year. As a result, all annual equity awards are expected to be granted on the date of the regular Board meeting to be held in February of the following year.

In determining the annual equity grants for 2017 performance (which were granted in February 2018), the Committee considered the following: (i) the Company’s historical year-over-year compensation practices, including historical grant levels; (ii) total compensation earned by the named executive officers; (iii) a peer group analysis conducted by Pearl Meyer of the compensation of executive officers holding comparable positions at the companies within the compensation peer group; and (iv) the Company’s objective to provide greater incentive based on long-term Company performance.

As set forth in the table below for the named executive officers other than Mr. Dugas, in February 2018, the Committee granted the following awards in recognition of such named executive officer’s performance in 2017. The value of these awards is excluded from the 2017 Summary Compensation Table, which reflects the value of the equity awards granted in 2017 in recognition of the named executive officers’ performance in 2016. The February 2018 grant levels were relatively consistent with the February 2017 grant levels, except as described below. Mr. Marshall’s grant increased from a grant date fair value of $1,625,002 in February 2017 to approximately $2,300,000 in February 2018 in acknowledgement of Mr. Marshall and the Company’s strong performance in 2017 and a desire to align Mr. Marshall’s compensation more closely with the competitive market.

Upon joining the Company, Mr. Sheldon received an annual equity grant of restricted stock units to align his compensation with the compensation the Company’s other executive officers, with a grant value of $300,000. In addition, as an inducement to join the Company, Mr. Sheldon received a sign-on equity grant of restricted stock units with a grant value of $600,000. The value of these grants was determined after considering competitive market data for the General Counsel position, the compensation received by Mr. Sheldon’s predecessor, as well as the compensation Mr. Sheldon was forfeiting from his prior employer.

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Executive Chairman Compensation Arrangements

On September 8, 2016, the Company entered into the Transition Agreement with Mr. Dugas in connection with Mr. Dugas’ retirement from the Company. Pursuant to the terms of the Transition Agreement, Mr. Dugas retired from his position of Chief Executive Officer of the Company, effective September 8, 2016, and retired from his position of Executive Chairman of the Company, effective at the Company’s 2017 Annual Meeting of Shareholders on May 3, 2017. While serving as Executive Chairman, Mr. Dugas continued to receive his 2016 base salary of $1,200,000 through the date he ceased to serve as Executive Chairman and remained eligible to receive a 2017 grant of restricted share units (119,775 shares granted in February 2017, with a grant date value equal to $2,550,010). In addition, Mr. Dugas received a pro rated award under the 2017 Annual Program based on actual performance and the period in which he was employed during 2017 of $749,322. Please see the section “2017 Executive Compensation—Payments upon Termination or Change of Control” for additional information regarding the terms of Mr. Dugas’ separation.

Other Compensation Elements and Practices

Executive Severance Policy

The Committee has adopted the PulteGroup, Inc. Executive Severance Policy, which provides for severance benefits ranging from one times base salary to two times base salary, depending on the length of service with the Company and the executive’s position at the time of a qualifying termination of employment. The Committee also has adopted the PulteGroup, Inc. Retirement Policy, which establishes administrative guidelines for the treatment of outstanding equity and long-term incentive awards following an employee’s qualifying retirement. The Committee believes that these policies help us accomplish our compensation philosophy of attracting and retaining exemplary talent and reduce the need to negotiate individual severance arrangements with new and departing executives.

While these policies reduce the need to negotiate individual severance provisions, the Committee recognizes that under certain circumstances individual severance arrangements may be desirable or beneficial to the Company. Pursuant to the Company’s Executive Severance Policy, the Company is prohibited from entering into a severance agreement with a senior executive of the Company without shareholder approval if such agreement would provide for specified benefits exceeding 2.99 times the sum of (a) the senior executive’s annual base salary as in effect immediately prior to termination of employment and (b) the senior executive’s target annual bonus in the fiscal year in which the termination of employment occurs. Benefits excluded from this policy are (i) the value of any accelerated vesting of any outstanding equity-based award provided under plans, programs or arrangements of the Company applicable to one or more groups of employees in addition to the Company’s senior executives, (ii) a pro-rata portion of the value of any accelerated vesting of any outstanding long-term cash-based incentive award provided under plans, programs or arrangements of the Company applicable to one or more groups of employees in addition to the Company’s senior executives, (iii) compensation and benefits for services rendered through the date of termination of employment, (iv) any post-termination retirement and other benefits, special benefits or perquisites provided under plans, programs or arrangements of the Company applicable to one or more groups of employees in addition to the Company’s senior executives and (v) payments that are required by the Company’s By-laws regarding indemnification and/or a settlement of any claim made against the Company. The policy is available for viewing on our website at www.pultegroupinc.com.

Benefits

Named executive officers participate in employee benefit plans on the same terms as generally available to all employees. In addition, each of the named executive officers was eligible to participate in the Financial Counseling Reimbursement Plan during his employment with the Company. The named executive officers, as well as other Company executives, may also participate in the Company’s Non-Qualified Deferral Program, under which they may elect to defer the receipt of their annual incentive cash awards. This plan is discussed further under the section “2017 Non-Qualified Deferred Compensation Table.” We do not have a defined benefit pension plan.

Clawback Policy

The Committee has adopted a clawback policy with respect to the Annual Program, LTI Program, and equity grants. Under the policy, in the event any named executive officer engages in “detrimental conduct” (as defined in the policy), the Committee may require that such named executive officer (i) reimburse the Company for all or any portion of any bonus, incentive payment, equity-based award, or other compensation received by such named executive officer within the 36 months following such detrimental conduct and (ii) remit to the Company any profits realized from the sale of Company securities within the 36 months following such detrimental conduct.

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Prohibition Against Pledging and Hedging of Company Securities

To further enhance the linkage between executives’ long-term incentive compensation and shareholder value, the Company’s insider trading policy prohibits directors and executive officers from engaging in hedging or monetization transactions, such as zero-cost collars and forward sale contracts, with respect to their Company security holdings. Additionally, under the Company’s insider trading policy, directors and executive officers are prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan, as such arrangements could result under some circumstances in a margin sale or foreclosure sale occurring at a time when the director or executive officer is aware of material nonpublic information or otherwise is not permitted to trade in Company securities. The policy is available for viewing on our website at www.pultegroupinc.com.

Share Ownership Guidelines

To align our executives’ interests with those of our shareholders and to assure that our executives own meaningful levels of Company common shares throughout their tenures with the Company, our executive officers are subject to share ownership guidelines adopted by the Committee. The share ownership guidelines require, within a five-year period from date of hire, promotion or determination that a position is subject to Section 16 of the Exchange Act, the Chief Executive Officer to own Company common shares equal in value to at least six times his base salary and each of the other named executive officers to own Company common shares equal to at least three times their respective base salary. Included in the definition of share ownership are restricted shares and restricted share units, any Company common shares owned outright (including the value of restricted shares that have vested at the higher of the current market price or the share price on the date of vesting), common shares in any Company benefit plan, and the intrinsic value of vested in-the-money stock options. Unvested shares and underwater stock options do not count towards meeting share ownership guidelines. As of March 16, 2018, all of the named executive officers employed by the Company on that date have met or, within the applicable period, are expected to meet the share ownership guidelines.

HOW WE MAKE EXECUTIVE COMPENSATION DECISIONS

The Compensation and Management Development Committee

The Committee establishes our executive compensation philosophies and oversees the development and implementation of our executive compensation program. The Committee operates under a written charter adopted by the Committee. A copy of the charter is available at www.pultegroupinc.com. In general, the scope of the Committee’s authority is determined by the Board of Directors, or established by formal incentive plan documents. The fundamental responsibilities of the Committee include the following with respect to our senior executives:

Information on the Committee’s processes and procedures for consideration of executive compensation are addressed under “Committees of the Board of Directors—Compensation and Management Development Committee” above.

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The Committee is currently comprised of Mr. Richard W. Dreiling, Ms. Cheryl W. Grisé, Mr. Patrick J. O’Leary, Mr. Scott F. Powers and Mr. William J. Pulte. During fiscal year 2017, Mr. Blair served on the Committee until he became Non-Executive Chairman at the Company’s 2017 Annual Meeting of Shareholders, and Mr. Postl also served on the Committee until the conclusion of his term at the Company’s 2017 Annual Meeting of Shareholders. Mr. O’Leary currently serves as the Committee Chair. As noted above, assuming that all of the nominees are re-elected at the Annual Meeting, Mr. Powers will become the Chair of the Committee.

Each current member of the Committee qualifies as an independent director under NYSE listing standards and our Corporate Governance Guidelines, and Messrs. Blair and Postl qualified as independent directors under NYSE listing standards and our Corporate Governance Guidelines during their terms of service.

Independent Compensation Consultant

Pearl Meyer provides independent executive consulting services to the Committee. Pearl Meyer is retained by and reports to the Committee and participates in Committee meetings, as requested by the Committee. Pearl Meyer also:

During 2017, Pearl Meyer did not provide any other services to the Company.

Role of Executive Officers

As noted above, the Committee is responsible for all compensation decisions for our senior executives (which include the named executive officers). During 2017, Mr. James R. Ellinghausen, our Executive Vice President, Human Resources, worked with Mr. O’Leary to establish meeting agendas and to determine whether any members of the Company’s management or outside advisors should attend meetings.

Our Chief Executive Officer annually reviews the performance of each member of senior management (other than the performance of our Chief Executive Officer or our former Executive Chairman). Recommendations based on these reviews, including salary adjustments, annual bonuses and equity grants, are presented to the Committee. Decisions regarding salary adjustments, annual bonuses and equity grants for the Chief Executive Officer and our former Executive Chairman are made by the Committee. All decisions for 2017 made with respect to the named executive officers other than the Chief Executive Officer or our former Executive Chairman were made after deliberation with Mr. Marshall.

At various times during the year, at the request of the Committee, Ryan R. Marshall, the President and Chief Executive Officer of the Company; Robert T. O’Shaughnessy, the Executive Vice President and Chief Financial Officer of the Company; and Todd N. Sheldon, the Executive Vice President, General Counsel and Corporate Secretary of the Company, attended Committee meetings, or portions of Committee meetings, to provide the Committee with information regarding our operational performance, financial performance or other topics requested by the Committee to assist the Committee in making its compensation decisions.

Use of Tally Sheets

The Committee reviews tally sheets, prepared by management and reviewed by Pearl Meyer, which present comprehensive data on the total potential compensation for each of the named executive officers based on various equity grant values and performance levels under our incentive compensation programs. The tally sheets provide the Committee

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with a framework of potential minimum and maximum compensation levels that each named executive officer may earn under our executive compensation program. While the tally sheets provide a framework for the Committee, they are not determinative of the elements or amounts of compensation paid.

Compliance with Internal Revenue Code Section 162(m)

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), generally disallows a tax deduction to public companies for compensation over $1 million paid to any “covered employee” under Section 162(m), and provided that qualifying performance-based compensation would not be subject to the deduction limit if certain requirements are met. Historically, the Committee has sought to structure compensation to avail itself of the performance-based compensation exemption under Section 162(m) to the extent practicable. Because the Committee also recognizes the need to retain flexibility to make compensation decisions that may not meet Section 162(m) standards when necessary to enable the Company to continue to attract, retain and motivate highly-qualified executives, it reserves the authority to approve non-deductible compensation when it deems appropriate. Due to the ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations and guidance issued thereunder, no assurance can be given, notwithstanding our efforts, that compensation historically intended by us to satisfy the requirements for deductibility under Section 162(m) does, in fact, do so.

Section 162(m) of the Internal Revenue Code limits the federal income tax deduction for annual individual compensation to $1 million for certain executive officers of the Company. In the past, Section 162(m)’s deduction limit included an exception for “performance-based” compensation. With the enactment of tax reform in December 2017, the performance-based compensation exception was repealed, subject to a transition rule for certain written binding contracts in effect on November 2, 2017 and which are not materially modified after that date. Certain components of the Company’s executive compensation programs were generally designed to qualify for this performance-based exception, assuming other applicable regulatory requirements were satisfied. The tax consequences of an award will still be one of many factors that the Committee considers in designing executive compensation programs that support our goals of attracting, retaining and motivating our executive officers.

2018 COMPENSATION DECISIONS

At its February 2018 meeting, the Committee took the following actions with respect to 2018 compensation matters:

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COMPENSATION AND MANAGEMENT DEVELOPMENT

COMMITTEE REPORT

The Compensation and Management Development Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation and Management Development Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K and this Proxy Statement.

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2017 EXECUTIVE COMPENSATION

2017 Summary Compensation Table

The table below sets forth information concerning the compensation of our Chief Executive Officer, our Chief Financial Officer, our other three most highly compensated executive officers who served in such capacities as of December 31, 2017 and, pursuant to SEC executive compensation disclosure rules, Mr. Dugas (collectively, the “named executive officers”).

Pursuant to SEC disclosure rules, for 2016, this column also includes the incremental fair value associated with the modifications to the vesting terms of Mr. Dugas’ outstanding equity awards pursuant to the Transition Agreement. Accordingly, because the modification occurred in the same year as the 2016 awards were granted, in effect, the amount reported in this column for Mr. Dugas in 2016 reflects both the aggregate grant date fair value of the original 2016 awards and the incremental fair value of the modified 2016 awards—in effect, double counting the 2016 awards. The incremental value associated with the 2016 modification to Mr. Dugas’ outstanding equity awards equaled $8,918,268.

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2017 Grants of Plan-Based Awards Table

The following table sets forth information concerning award opportunities under our LTI Program and grants under the 2013 Stock Incentive Plan to the named executive officers during the fiscal year ended December 31, 2017, as well as estimated possible payouts under the Annual Program.