04/05/2021 | Press release | Distributed by Public on 04/05/2021 14:20

Proxy Statement (SEC Filing - DEF 14A)

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

Proxy Statement Pursuant To Section 14(a) Of The

Securities Exchange Act Of 1934

Filed by the Registrant ☑
Filed by a Party other than the Registrant ☐
Check the appropriate box:

The New Home Company Inc.

(Name of the 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):

April 5, 2021

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of The New Home Company Inc. to be held on May 18, 2021 at 8:30 a.m. local time, at The New Home Company's Inc.'s Irvine office, located at 15231 Laguna Canyon Road, Suite 250, Irvine, California 92618.

You are invited to attend the meeting in person, although due to the public health impact of the COVID-19 pandemic, anyone who does not feel well should not attend. Attendees will be expected to comply with important health and safety protocols as recommended or required by the Centers for Disease Control and Prevention or state or local governments, including: wearing an appropriate face covering at all times, hand washing and/or applying hand sanitizer upon arrival and maintaining a six-feet distance from other attendees. We are continuing to monitor the public health and travel concerns of our stockholders, directors and employees in light of COVID-19. We may consider the possibility of holding a virtual meeting by means of remote communication. We will announce any alternative arrangements for the annual meeting as promptly as practicable if a decision is made to change the location of the Annual Meeting and/or hold a virtual meeting. If you are planning to attend our meeting, please check the 'Investors' section on our website at https://www.NWHM.com.

Our Annual Meeting is being held for the following purposes: (i) to elect each of Gregory P. Lindstrom, Cathey Lowe, and Douglas C. Neff as Class I directors to serve for a three-year term expiring at our 2024 annual meeting of stockholders; (ii) to approve the Second Amended and Restated 2016 Incentive Award Plan; (iii) to seek an advisory vote on the compensation paid to the Company's named executive officers (commonly referred to as 'Say on Pay'); (iv) to ratify the selection of KPMG LLP as our independent registered public accounting firm for 2021; and (v) to transact such other business as may properly come before the Annual Meeting. The accompanying Notice of Annual Meeting of Stockholders and proxy statement describe these matters. We urge you to read this information carefully.

Our Board of Directors unanimously believes that (i) the election of its three nominees to serve as our Class I directors, (ii) the approval of the Second Amended and Restated 2016 Incentive Plan, (iii) the approval, on an advisory basis, of the compensation paid to the Company's named executive officers, and (iv) the ratification of our Audit Committee's selection of KPMG LLP as our independent registered public accounting firm for 2021 are in the best interests of the Company and our stockholders, and, accordingly, recommends a vote 'FOR' the election of each of Gregory P. Lindstrom, Cathey Lowe, and Douglas C. Neff , a vote 'FOR' the approval of the Second Amended and Restated 2016 Incentive Award Plan, a vote 'FOR' the compensation paid to the Company's named executive officers, and a vote 'FOR' the ratification of the selection of KMPG LLP as our independent registered public accounting firm for 2021.

Your vote is important and it is important that your shares be represented and voted whether or not you plan to attend the Annual Meeting in person. You may vote on the Internet, or if you are receiving a paper copy of the proxy statement, by telephone or by completing and mailing a proxy card or voting instruction card. Voting over the Internet, by telephone or by written proxy will ensure your shares are represented at the Annual Meeting.

Thank you for your continued interest in and support of The New Home Company.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 18, 2021

To our stockholders:

The 2021 Annual Meeting of Stockholders of The New Home Company Inc. will be held on May 18, 2021 at 8:30 a.m. local time, at The New Home Company Inc.'s Irvine office, located at 15231 Laguna Canyon Road, Suite 250, Irvine, California 92618 (the 'Annual Meeting') for the following purposes:

The proxy statement accompanying this notice describes each of these items of business in more detail.

Our Board of Directors has fixed the close of business on March 22, 2021 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements of the Annual Meeting and only record holders of common stock at the close of business on that day will be entitled to vote. In order to constitute a quorum for the conduct of business at the Annual Meeting, holders of a majority of all outstanding shares of Common Stock of the Company must be present in person or represented by proxy.

Your vote is very important. It is important that your shares be represented and voted whether or not you plan to attend the Annual Meeting. Whether or not you plan to attend the Annual Meeting, we encourage you to submit your proxy or voting instruction form as soon as possible using one of the following methods: (i) by granting your proxy electronically via the Internet by following the instructions on the Notice of Internet Availability of Proxy Materials or voting instruction form previously mailed to you; or (ii) if you are receiving a paper copy of the proxy statement, by signing, dating and returning by mail the proxy card or voting instruction form provided to you or following the voting instructions on the proxy card or voting instruction form, as applicable.

Important Notice Regarding the Availability of Proxy Materials for the 2021 Annual Meeting of Stockholders to be Held on May 18, 2021. The Notice of Annual Meeting of Stockholders, the Proxy Statement, our 2020 Annual Report and a sample proxy card are available at www.proxyvote.com.

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 18, 2021

TABLE OF CONTENTS

TABLE OF CONTENTS (Continued)

THE NEW HOME COMPANY INC.

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

To Be Held on May 18, 2021

INFORMATION CONCERNING VOTING AND SOLICITATION

General

Your proxy is solicited on behalf of the board of directors (our 'Board') of The New Home Company Inc., a Delaware corporation (the 'Company'), for use at our 2021 Annual Meeting of Stockholders to be held May 18, 2021 at 8:30 a.m. local time at The New Home Company Inc.'s Irvine office located at 15231 Laguna Canyon Road, Suite 250, Irvine, California 92618, or at any continuation, postponement or adjournment thereof (the 'Annual Meeting'), for the purposes discussed in this proxy statement and in the accompanying Notice of Annual Meeting of Stockholders and any business properly brought before the Annual Meeting. Proxies are solicited to give all stockholders of record an opportunity to vote on matters properly presented at the Annual Meeting.

We have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the 'Notice') to our stockholders of record, while brokers and other nominees who hold shares on behalf of beneficial owners will be sending their own similar notice. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to request a printed copy of the proxy materials by mail or electronically may be found on the Notice and on the website referred to in the Notice, including an option to request paper copies on an ongoing basis. On or about April 5, 2021, we intend to make this proxy statement available on the Internet and to mail the Notice to all stockholders entitled to vote at the Annual Meeting. We will mail this proxy statement and our Annual Report, together with a proxy card to those stockholders entitled to vote at the Annual Meeting who have properly requested paper copies of such materials, within three business days of such request.

Some banks, brokers and other nominee record holders may be participating in the practice of 'householding' proxy materials. This means that only one copy of our proxy materials or the Notice, as applicable, may have been sent to multiple stockholders in the same house. We will promptly deliver a separate Notice and, if requested, a separate proxy statement and annual report, to each stockholder that makes a request using the procedure set forth on the Notice.

Our principal executive offices are located at 6730 N Scottsdale Rd., Suite 290, Scottsdale, Arizona 85253. The telephone number of our principal executive offices is (602) 767-1426.

Important Notice Regarding the Availability of Proxy Materials for the 2021 Annual Meeting of Stockholders to be Held on May 18, 2021.

The Notice of Annual Meeting of Stockholders, this proxy statement, our 2020 Annual Report (the 'Annual Report') and a sample proxy card are available at www.proxyvote.com. You are encouraged to access and review all of the important information contained in the proxy materials before voting.

Who Can Vote

You are entitled to vote if you were a stockholder of record of our common stock as of the close of business on March 22, 2021. At the close of business on March 22, 2021, 18,109,101 shares of our common stock were outstanding and entitled to vote. You are entitled to one vote for each share of common stock held on all matters to be voted upon at the Annual Meeting. Your shares may be voted at the Annual Meeting only if you are present in person or represented by a valid proxy.

Voting of Shares

Any stockholder as of the record date may vote by attending the Annual Meeting and voting in person, or by submitting a proxy. The method of voting by proxy differs (1) depending on whether you are viewing this proxy statement on the Internet or receiving a paper copy, and (2) for shares held as a record holder and shares held in 'street name.'

Record Holders. If you hold your shares of common stock as a record holder and you are viewing this proxy statement on the Internet, you may vote by submitting a proxy over the Internet by following the instructions on the website referred to in the Notice previously mailed to you. You may request paper copies of the proxy statement, Annual Report and proxy card by following the instructions on the Notice. If you hold your shares of common stock as a record holder and you are reviewing a paper copy of this proxy statement, you may vote your shares by completing, dating and signing the proxy card that was included with the proxy statement and promptly returning it in the pre-addressed, postage paid envelope provided to you, or by submitting a proxy over the Internet or by telephone by following the instructions on the proxy card.

Street Name. If you hold your shares of common stock in street name, which means your shares are held of record by a broker, bank or nominee, you will receive a notice from your broker, bank or other nominee that includes instructions on how to vote your shares. Your broker, bank or nominee will allow you to deliver your voting instructions over the Internet and may also permit you to vote by telephone or by mail. In addition, you may request paper copies of the proxy statement and voting instruction form from your broker by following the instructions on the notice provided by your broker.

Stockholders may provide voting instructions by telephone by calling toll free 1-800-690-6903 from the U.S. or Canada, or via the internet at www.proxyvote.com at any time before 11:59 p.m. Eastern Time on May 17, 2021. Telephone and internet voting access is available 24 hours a day, 7 days a week until 11:59 p.m. Eastern Time on May 17, 2021. Please have your notice and proxy control number in hand when you telephone or visit the website. If you vote through the Internet, you should be aware that you may incur costs to access the Internet, such as usage charges from telephone companies or Internet service providers and that these costs must be borne by you. If you vote by Internet or telephone, then you need not return a written proxy card or voting instruction form by mail.

YOUR VOTE IS VERY IMPORTANT. You should submit your proxy even if you plan to attend the Annual Meeting. If you properly give your proxy or voting instruction form and submit it to us in time to vote, one of the individuals named as your proxy will vote your shares as you have directed.

All shares entitled to vote and represented by properly submitted proxies (including those submitted electronically, telephonically and in writing) received before the polls are closed at the Annual Meeting, and not revoked or superseded, will be voted at the Annual Meeting in accordance with the instructions indicated on those proxies. If, as a record holder, you do not indicate your voting directions on your signed proxy, your shares will be voted according to the recommendation of our Board, as follows:

The proxy gives each of Leonard S. Miller and John M. Stephens discretionary authority to vote your shares in accordance with his best judgment with respect to all additional matters that might come before the Annual Meeting and any continuation, postponement or adjournment of the Annual Meeting. If you hold your shares in street name and do not give direction to your broker on how to vote your shares, your broker does not have authority to vote on the election of the directors, the Amended Plan, or Say on Pay. Your broker does have discretion to vote on the ratification of the selection of the independent auditors.

Revocation of Proxy

If you are a stockholder of record, you may revoke your proxy at any time before your proxy is voted at the Annual Meeting by taking any of the following actions:

Attendance at the Annual Meeting will not, by itself, revoke a proxy. Written notices of revocation and other communications with respect to the revocation of the Company proxies should be addressed to our Secretary at:

The New Home Company Inc.

15231 Laguna Canyon Road, Suite 250

Irvine, CA 92618

Attn: Secretary

If your shares are held in 'street name,' you may change your vote by submitting new voting instructions to your broker, bank or other nominee. You must contact your broker, bank or other nominee to find out how to do so. See 'Voting in Person' below regarding how to vote in person if your shares are held in street name.

Attending the Annual Meeting

Stockholders who wish to attend the Annual Meeting will be required to present: (1) verification of ownership of our common stock, such as a bank or brokerage firm account statement and (2) a valid government-issued picture identification, such as a driver's license or passport. Directions to the Annual Meeting are available at www.proxyvote.com.

No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting.

In accordance with recommendations from the Centers for Disease Control and local and state officials, we will require any attendees to wear an appropriate face covering at all times, wash hands and/or apply hand sanitizer upon arrival and maintain at least six-feet distance from other attendees.The Annual Meeting will be held in our largest open area with social distancing being observed. Dual-intake air purifiers with HEPA filters have been installed throughout the office. We ask that you please consider others and do not enter the meeting if you have symptoms of COVID-19, such as fever or cough. We will have hand sanitizer and sanitizing wipes available on site. As noted in our cover letter to this Proxy Statement, we are monitoring the situation with COVID-19 and if we believe it is necessary, will change to holding a virtual meeting by means of remote communication.

Voting in Person

If you plan to attend the Annual Meeting and wish to vote in person, you will be given a ballot at the Annual Meeting. Please note, however, that if your shares are held in 'street name,' which means your shares are held of record by a broker, bank or other nominee, and you wish to vote at the Annual Meeting, you must bring to the Annual Meeting a legal proxy from the record holder of the shares, which is the broker or other nominee, authorizing you to vote at the Annual Meeting.

Quorum and Votes Required

At the close of business on March 22, 2021, 18,109,101 shares of our common stock were outstanding and entitled to vote. All votes will be tabulated by the inspector of election appointed for the Annual Meeting.

Quorum. A majority in voting power of the outstanding shares of common stock entitled to vote, present in person or represented by proxy, will constitute a quorum at the Annual Meeting. Shares of common stock held by persons attending the Annual Meeting but not voting, shares represented by proxies that reflect abstentions as to a particular proposal, and broker 'non-votes' will be counted as present for purposes of determining a quorum.

Broker Non-Votes and Abstentions. Brokers or other nominees who hold shares of common stock in 'street name' for a beneficial owner of those shares typically have the authority to vote in their discretion on 'routine' proposals when they have not received instructions from beneficial owners. However, without specific instruction from the beneficial owner, brokers or other nominees are not allowed to exercise their voting discretion with respect to the election of directors or for the approval of matters which are considered to be 'non-routine.' These non-voted shares are referred to as 'broker non-votes.' Only Proposal 4 (ratifying the appointment of our independent registered public accounting firm) is considered a routine matter. Proposal 1 (election of directors), Proposal 2 (approving the Amended Plan), and Proposal 3 (Say on Pay) are considered non-routine matters, and without your instruction, your broker or other nominee cannot vote your shares.Broker non-votes are not considered as having voted for purposes of determining the outcome of a vote. Abstentions may be specified for Proposals 2, 3 and 4 (approval of the Amended Plan, Say on Pay and ratification of the appointment of our independent registered public accounting firm) and your vote may be 'withheld' in the election of directors. Stockholder approval of each proposal requires the following votes:

Solicitation of Proxies

Our Board is soliciting proxies for the Annual Meeting from our stockholders. We will bear the entire cost of soliciting proxies from our stockholders. In addition to the solicitation by mail, the Company, our officers, employees and agents may solicit proxies by telephone, by facsimile, electronically, including by email or in person for which they will receive no additional compensation. We do not expect to use a proxy solicitor to assist in the solicitation of proxies at this year's annual meeting. Copies of solicitation materials will be furnished to banks, brokers, fiduciaries and custodians holding shares of our common stock in their names that are beneficially owned by our stockholders, so that they may forward the solicitation materials to the beneficial owners and secure those beneficial owners' voting instructions. We may reimburse persons representing beneficial owners for their costs of forwarding the solicitation materials to the beneficial owners.

Stockholder List

A list of stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder for any purpose germane to the Annual Meeting during ordinary business hours for the ten days prior to the annual meeting at our principal executive offices at 6730 N Scottsdale Rd. Suite 290, Scottsdale, Arizona 85253 and our corporate Irvine office located at 15231 Laguna Canyon Road, Suite 250, Irvine, California 92618. Such list will also be available at the Annual Meeting.

Explanatory Note

In June 2018, the Securities and Exchange Commission (the 'SEC') revised its definition of 'smaller reporting company' by, among other things, increasing the public float test to qualify as a 'smaller reporting company' as defined in Item 10(f) of Regulation S-K of the Securities Act of 1933. We take advantage of certain exemptions from various reporting requirements that apply to companies that are not 'smaller reporting companies,' including reduced disclosure about our executive compensation arrangements and exemption from being required to include a Compensation Discussion and Analysis section in this proxy statement. We may continue to utilize some or all of the exemptions available to smaller reporting companies until such time that we are no longer a smaller reporting company. Accordingly, the information contained herein may be different from the information you receive from other public companies in which you invest. We previously took advantage of the exemption from the requirement to seek non-binding advisory votes on executive compensation by virtue of our previous 'emerging growth company' status. We ceased to be an 'emerging growth company' on December 31, 2019. Accordingly, last year was the first time we sought non-binding advisory votes on executive compensation and the frequency of 'Say on Pay' votes.

PROPOSAL 1

ELECTION OF DIRECTORS

Board Structure and Nominees

Our Board currently consists of eight directors. The directors are divided into three classes; Class I, Class II, and Class III. Each director serves a term of three years. At each Annual Meeting, the term of one class expires. The class of directors with a term expiring at this Annual Meeting, Class I, consists of three directors.

Based upon the recommendation of our Nominating and Corporate Governance Committee, our Board has nominated Gregory P. Lindstrom, Cathey Lowe, and Douglas C. Neff for election as Class I directors to the Board at the Annual Meeting. If elected, each director nominee would serve a three-year term expiring at the close of our 2024 Annual Meeting, or until their successors are duly elected. Gregory P. Lindstrom, Cathey Lowe, and Douglas C. Neff currently serve on our Board. Biographical information on each of the nominees is furnished below under 'Director Biographical Information.'

The Company is party to an investor rights agreement (as amended, the 'Investor Rights Agreement') with IHP Capital Partners VI, LLC ('IHP') and each of H. Lawrence Webb, Wayne Stelmar, and Joseph Davis. Pursuant to the Investor Rights Agreement, IHP has the right to designate one individual for nomination and election to our Board for as long as IHP owns 4% or more of our then-outstanding common stock (excluding shares of common stock that are subject to issuance upon the exercise or exchange of rights of conversion or any options, warrants or other rights to acquire shares). IHP has also agreed to vote all shares of our common stock that it owns in favor of Messrs. Webb, Stelmar or Berchtold (or, if at that time nominated as a director, Mr. Davis) in any election in which Messrs. Webb, Stelmar or Berchtold (or, as the case may be, Mr. Davis) is a nominee, and each of Messrs. Webb, Stelmar, and Davis has agreed to vote all shares of our common stock that he owns in favor of each nominee designated by IHP in any election of directors in which such a designee was a nominee. Douglas C. Neff is the nominee designated by IHP.

Set forth below is information as of March 22, 2021 regarding each of our directors, including each director nominee. Dates of service prior to January 30, 2014 relate to service on the board of managers of The New Home Company LLC which converted into a Delaware corporation and was renamed The New Home Company Inc. on January 30, 2014 in connection with our initial public offering.

_________________

Board Recommendation

OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE 'FOR' EACH OF THE THREE NAMED DIRECTOR NOMINEES. UNLESS YOU GIVE CONTRARY INSTRUCTIONS, THE SHARES REPRESENTED BY YOUR RETURNED EXECUTED PROXY WILL BE VOTED 'FOR' EACH OF THE THREE NAMED DIRECTOR NOMINEES.

Directors Continuing in Office Until the 2022 Annual Meeting of Stockholders

Directors Continuing in Office Until the 2023 Annual Meeting of Stockholders

H. Lawrence Webb. Mr. Webb has served as our Executive Chairman since August 2019 and has been Chairman of our Board since the completion of our initial public offering. Mr. Webb was our Chief Executive Officer from 2010 to August 2019. Prior to our initial public offering, he was a member of our board of managers since 2010 and our predecessor company since its formation in 2009. As a founder, Mr. Webb leads the Company's overall vision, strategic planning and policy making. Mr. Webb's 30 years of experience are distinguished by a conscientious approach toward homebuyers, communities and employees. This includes his many charitable commitments such as serving on the board of Interval House, and his previous service on the board of HomeAid America and his dedication to helping cities, families and neighborhoods. Mr. Webb founded The New Home Company on these same principles. Between 1995 and 2008, he was Chief Executive Officer of John Laing Homes, where he was instrumental in growing it from a small, two-market company to one of the largest private homebuilders in the United States. Prior to joining John Laing Homes, he was Division President for Orange, Riverside and San Bernardino Counties for Kaufman & Broad, as well as Orange Country President of Greystone Homes. From 2008-2009, Mr. Webb served as Co-Chief Restructuring Officer for LandSource. Throughout his career, Mr. Webb has been honored and recognized by the industry for his philanthropy, marketing excellence and visionary leadership. He holds a Master's degree in City and Regional Planning from Harvard University. As noted above, pursuant to the Investor Rights Agreement, IHP has agreed to vote all shares of our common stock that it owns in favor of Mr. Webb in any election in which Mr. Webb is a nominee. For more information, see '-Board Structure and Nominees.' The Board has concluded Mr. Webb should serve as a director and our Executive Chairman based on his leadership, vision, deep knowledge of our business, and experience in many facets of the homebuilding business.

Paul C. Heeschen. Mr. Heeschen was appointed as a member of our Board effective upon the completion of our initial public offering. For the past 23 years, he has been a Principal of Heeschen & Associates, a private investment firm. Mr. Heeschen serves as a General Partner of Sequoia Enterprises, LP, D.C.H. LP and Redwood Enterprises VII LP. Mr. Heeschen served as an Executive Chairman of Diedrich Coffee Inc. from February 2010 to May 2010 and Director from January 1996 to May 2010. He served as Non-Executive Chairman of Diedrich Coffee, Inc. from February 2001 to January 2010. Mr. Heeschen was a Director at PCM, Inc., a NASDAQ-listed company, from February 2006 until the company merged with Insight Enterprises, Inc. (NSIT) on August 30, 2019 and served on its audit, compensation and nominating and corporate governance committees. Mr. Heeschen received his Bachelor of Science in Accounting from University of Southern California. Mr. Heeschen is a CPA (inactive). The Board has concluded Mr. Heeschen should serve as a director based on his financing and investment experience and prior executive leadership roles at public and private companies.

Family Relationships and Other Information

There are no family relationships between any of our directors or executive officers.

CORPORATE GOVERNANCE

Executive Officers

Set forth below is information regarding each of our executive officers as of March 22, 2021.

H. Lawrence Webb. is our Executive Chairman. For Mr. Webb's biographical information, see 'Proposal 1-Election of Directors-Director Biographical Information.'

Leonard S. Miller. Mr. Miller was appointed Chief Executive Officer on August 30, 2019 and President on January 23, 2019 and served as Chief Operating Officer from March 2017 to August 2019. Prior to joining the Company, from April 2004 to March 2017, Mr. Miller worked at M.D.C Holdings Inc. under the Richmond American Homes brand where he had regional and divisional responsibility for several markets in the western United States. Before his tenure at Richmond, starting in 1994, Mr. Miller held several positions at Genstar Land Company, which later became a part of Newland Communities. Earlier in his career, Mr. Miller worked for a small San Diego-based land developer that specialized in small mixed-use developments. In addition to his work in the homebuilding and development industries, Mr. Miller spent four years in public accounting with the CPA firm Arthur Young. Mr. Miller has served on numerous boards in leadership roles including service as president of both the Building Industry Association of Southern California and Riverside. He holds a BS degree in Accounting from the University of Southern California, as well as an MBA from San Diego State University.

John M. Stephens. Mr. Stephens has served as Chief Financial Officer since June 2015 and Executive Vice President since August 2019. Prior to joining the Company, Mr. Stephens served as Senior Vice President, Chief Financial Officer and Principal Accounting Officer of M.D.C. Holdings Inc. from February 2012 to May 2015. He previously was with Standard Pacific Corp., serving as Chief Financial Officer from February 2009 through June 2011, Senior Vice President from May 2007 through June 2011, Corporate Controller from November 1996 through February 2009 and Treasurer from May 2001 until October 2002 and from November 2009 through June 2011. Mr. Stephens brings significant and relevant public company financial experience and expertise due to his previous roles at public company homebuilders. Prior to Standard Pacific, Mr. Stephens was an audit manager with the international accounting firm Arthur Andersen LLP.

Composition of our Board of Directors

Our Amended and Restated Certificate of Incorporation provides that, subject to the rights and preferences of any series of outstanding preferred stock, the authorized number of directors shall consist of at least three directors, with the exact number set by our Board. Our Board has set the current authorized directors at eight members, and our Board currently consists of eight directors. The directors are divided into three classes; Class I, Class II, and Class III. Each director serves a term of three years. At each Annual Meeting, the term of one class expires. The class of directors with a term expiring at this Annual Meeting, Class I, consists of three directors.

Our Board has adopted Corporate Governance Guidelines concerning overall governance practices. These guidelines can be found in the 'Investors' section of our website at https://www.NWHM.com. In addition, these guidelines are available in print to any stockholder who requests a copy. Please direct all requests to our Secretary at The New Home Company Inc., Attention: Secretary, 15231 Laguna Canyon Road, Suite 250, Irvine, California 92618.

The Investor Rights Agreement provides for board nomination rights and voting obligations. For a discussion of this agreement, please see 'Proposal 1-Election of Directors-Board Structure and Nominees.'

As permitted by our Corporate Governance Guidelines, the Board adopted a Lead Independent Director Charter in February 2018 to provide for an independent nonexecutive director to act as Lead Independent Director. Characteristics for the Nominating and Corporate Governance Committee to consider in making a nomination for Lead Independent Director include: (i) sound judgment and confidence to

stand up for proper course of action in difficult times, (ii) understanding of the Company, its industry and strategy, (iii) forward-looking vision for the Company, (iv) interpersonal skills necessary to: build consensus, foster communication, be a trusted sounding board for directors, and communicate with stockholders on complex issues, and (v) time and desire to properly perform the role. The Lead Independent Director is nominated by the Nominating and Corporate Governance Committee and confirmed by a majority of the independent directors of the Board to serve for such term as determined by those directors or until such earlier time as she or he ceases to be a director, resigns as Lead Independent Director, or is replaced as Lead Independent Director by a majority vote of the independent directors. Mr. Berchtold currently serves as our Lead Independent Director.

The specific responsibilities of the Lead Independent Director when acting as such include the following:

The Board recognizes the importance of regularly evaluating our particular circumstances to determine if our leadership structure continues to serve the best interests of us and our stockholders. To this end, the Board engages in a regular assessment, at least annually, of whether the then current leadership structure remains the most appropriate for us. Our Corporate Governance Guidelines permit the Board to fill the positions of Chairman and Chief Executive Officer with one individual or two different individuals and, as noted above, also allow the Board to appoint a Lead Independent Director. As a result, the Board has the flexibility to alter its leadership structure in the future to adapt to changing circumstances as and when needed.

Self-Evaluation and Management Evaluations, Executive Sessions

The independent directors of our Board periodically meet in executive session without management or other employees present. At least annually, the Board performs a performance evaluation of management and the CEO. The Board also conducts an annual self-assessment of each individual director's performance, the Board's performance, and the performance of each committee of the Board. Each committee also conducts a similar self-assessment, both at the individual and committee level. The Nominating and Corporate Governance Committee utilizes the results of this self-evaluation process in assessing and determining the characteristics and critical skills required of prospective candidates for election to the Board and making recommendations to the Board with respect to assignments of Board members to various committees. In addition, such evaluations are considered in light of the Company's business strategy and operations to identify desired characteristics of future Board members. The self-evaluation process also allows a dedicated time for the Board to identify opportunities for improvement, including an evaluation of the Board's role in governance and risk oversight. In its 2020 evaluation, for example, it was noted that in light of the pandemic and virtual meetings, spreading committee and Board meetings across two days would promote more Board and committee effectiveness, which recommendation was implemented for the 2021 year.

Board Independence

Our Board has determined that five of our current directors, Messrs. Berchtold, Bakhshandehpour, Lindstrom, Heeschen and Ms. Lowe, constituting a majority satisfy the listing standards for independence of the New York Stock Exchange (the 'NYSE') and Rule 10A-3 under the Exchange Act, as well as our own Corporate Governance Guidelines. Mr. Webb is not considered independent as he is employed by the Company as our Executive Chairman. Mr. Neff is President of IHP Capital Partners, which is an affiliate of IHP, the owner of approximately 13.6% of our stock. IHP Capital Partners is also involved in various related party transactions described in more detail under 'Certain Relationships and Related Person Transactions-Transactions With Related Persons.' Due to the foregoing, Mr. Neff does not satisfy the New York Stock Exchange Standards and has not been determined independent. The Board also did not affirmatively determine that Mr. Stelmar was independent. During 2019, Mr. Stelmar provided consulting services as described under 'Certain Relationships and Related Person Transactions-Transactions With Related Persons' and was previously an executive officer of the Company in 2017.

Meetings and Director Attendance

The Chairman or his designee, taking into account suggestions from the Lead Independent Director and other Board members, establishes the agenda for each Board meeting and distributes it in advance to each member of our Board. Each Board member is free to suggest the inclusion of items on the agenda.

Attendance at Board Meetings. Our Board held eight meetings during 2020, and all current directors attended at least 95% of the combined total of (i) all Board meetings and (ii) all meetings of committees of our Board of which the director was a member. The independent directors of our Board regularly meet in executive session without management or other employees present.

Attendance at Annual Meeting of Stockholders. Although we have no policy with regard to Board attendance at our annual meetings of stockholders, our directors are invited and generally expected to attend the Company's annual meeting of stockholders. All of our Board members attended our 2020 annual meeting of the stockholders in person or via teleconference.

Board Committees

Our Board maintains a standing Audit Committee, Nominating and Corporate Governance Committee, and Compensation Committee. In 2019, the Company also formed the Related Party Review Committee to review certain related party transactions. To view the charter of each of our Audit Committee, our Nominating Committee, and our Compensation Committee, as well as our Lead Independent Director charter, please visit the 'Investors' section of our website at https://www.NWHM.com. In addition, the charters for each of those committees are available in print to any stockholder who requests a copy. Please direct all requests to our Secretary at The New Home Company Inc., Attention: Secretary, 15231 Laguna Canyon Road, Suite 250, Irvine, California 92618. Our Board has determined that each of the members of our Audit Committee, our Nominating and Corporate Governance Committee and our Compensation Committee is independent in accordance with the NYSE rules, the requirements of SEC and our Corporate Governance Guidelines. The membership of all of our standing Board committees as of March 22, 2021 is as follows:

_________________

X - Member

C - Chair

* Lead Independent Director

Compensation Committee

Our Compensation Committee is comprised of Messrs. Lindstrom (Chair) and Bakhshandehpour and Ms. Lowe. Our Board has determined that all of the members of our Compensation Committee are 'independent' within the meaning of our director independence standards and the NYSE director independence standards (including those applicable to Compensation Committee members). Our Compensation Committee (or a subcommittee thereof) consists of at least two directors that qualify as 'non-employee directors' for the purposes of Rule 16b-3 under the Exchange Act. The Board has determined that Messrs. Lindstrom (Chair) and Bakhshandehpour and Ms. Lowe each qualify as 'non-employee directors.' Our Compensation Committee met five times in 2020. Our Compensation Committee reviews and establishes the compensation of our senior executives, including our Chief Executive Officer, on an annual basis, has direct access to third party compensation consultants and legal counsel, and administers our equity based plans, including the review and grant of equity awards to eligible employees under our equity-based plans. The Compensation Committee also periodically reviews the compensation of directors for service on the Board and its committees and recommends changes in compensation to the Board as appropriate. The Compensation Committee performs an annual compensation risk assessment and may also, from time to time, review and approve overall compensation programs. As discussed below, the Compensation Committee's independent compensation consultant provides a risk assessment of our compensation practices to help the Compensation Committee perform its annual compensation risk assessment. Following its annual risk assessment for the 2020 compensation year, in conjunction with advice from its compensation consultant, the Compensation Committee determined that it does not believe the Company's compensation plans are likely to result in a material and adverse effect on the Company. Our Compensation Committee may delegate any or all of its responsibilities to a subcommittee of the Compensation Committee to the extent permitted by applicable law.

Our Compensation Committee reviews and approves or recommends all compensation for all executive officers and all officers as such term is defined in Rule 16a-1, promulgated under the Exchange Act, directors and all such categories of other employees of the Company or its subsidiaries as our Board determines from time to time. For compensation decisions relating to our Chief Executive Officer, our Compensation Committee reviews and approves corporate goals and objectives relating to the compensation of the Chief Executive Officer, evaluates the performance of the Chief Executive Officer in light of those goals and objectives and, based upon this evaluation (either alone or, if directed by the Board, in conjunction with a majority of the independent directors of the Board), sets the Chief Executive Officer's compensation. The Compensation Committee also performs an annual performance evaluation of all officers as such term is defined in Exchange Act Rule 16a-1 and leads a management evaluation discussion with the full non-employee board in executive session on an annual basis.

Use of Compensation Consultant and Role of Management

Our Compensation Committee is committed to staying apprised of current issues and emerging trends, and ensuring that our executive compensation program remains aligned with best practice. To this end, our Compensation Committee has engaged the services of Semler Brossy Consulting Group ('SBCG') to assist it in evaluating executive compensation matters. During 2020, SBCG only provided services to our Compensation Committee and such services were related primarily to executive and non-employee director compensation. SBCG also provided additional services related to compensation of employees below the executive officer level for purposes of providing the Compensation Committee with advice regarding our overall compensation programs, including risks related thereto. The Compensation Committee solicited and authorized such additional services by SBCG. While conducting assignments, SBCG interacts with our management when appropriate. Our General Counsel works with SBCG to provide information regarding the Company and helps prepare its executive compensation policies and practices. The Company's Chief Executive Officer annually reviews each executive officer's performance with the Compensation Committee and makes recommendations to the Compensation Committee with respect to the appropriate base salary and incentive compensation program for each executive officer other than himself. The Compensation Committee takes these proposals into consideration, among other matters, when making compensation decisions. SBCG reports directly to our Compensation Committee with respect to executive and non-employee director compensation matters and the Compensation Committee may replace SBCG or hire additional consultants at any time. During 2020, SBCG provided our Compensation Committee and Board with compensation data related to executives at public homebuilders, helped the Compensation Committee select appropriate performance measures and goals, and advised the Compensation Committee regarding evolving compensation best practices and trends. Specifically, SBCG provided information relating to competitiveness of pay levels, compensation plan design and pool availability, executive ownership guidelines, specific equity grant matters, market trends, and risk assessment and management. SBCG advised on the proposed terms and features of the Amended Plan (Proposal 2) and also reviewed and commented on the Company's 2020 proxy statement. During 2020, at the request of the Compensation Committee, a representative of SBCG attended all scheduled quarterly Compensation Committee meetings.

For further information on our executive officers' compensation, please see 'Executive Compensation.'

Related Party Review Committee

In March 2019 the Board formed the Related Party Review Committee to analyze, evaluate and negotiate, as applicable, related party transactions with entities affiliated with IHP and Douglas C. Neff. The Related Party Review Committee is comprised of Messrs. Heeschen (Chair), Lindstrom, Bakhshandehpour and Ms. Lowe. This committee is delegated the power (but not the obligation) to substitute for our Audit Committee under our related party transactions policy for purposes of such transactions.

Risk Oversight

One of the key functions of our Board is informed oversight of our risk management process. The involvement of our full Board in determining our business strategy is a key part of its assessment of management's risk tolerance and also a determination of what constitutes an appropriate level of risk for the Company. Our Board administers oversight for the risk management process function directly, with support from its standing committees, each of which will address risks specific to its area of oversight. The risk management process implemented by our executive officers and key managers addresses risks related to the Company's operations, financing and liquidity needs, financial reporting, internal control and regulatory compliance. Management is also responsible for ensuring that the Board and its committees are kept well informed of changing risks. In some instances the Board delegates responsibility for the execution of certain elements of risk oversight to the committees in order to ensure appropriate expertise, attention and diligence. The committees oversee the relevant risk areas and report to the Board regularly. Some of the risk areas in which risk oversight is reviewed are listed below.

Land Acquisition. Our ability to build and sell homes that meet buyer demand is heavily impacted by our ability to control, buy and develop land and lots in a cost effective manner. We control the amount of financial resources used in the acquisition of land and lots through a centralized land acquisition approval process which requires land committee approval before financial resources are authorized to be expended for this purpose. The land committee is comprised of our Executive Chairman, CEO and CFO. In addition, land committee approval includes corporate legal review and an assessment of risks associated with the transaction. In addition, management must obtain the approval of the Board before proceeding with any land acquisition above a pre-established threshold. When the Board reviews particular transactions and initiatives that require Board approval, or that otherwise merit the Board's involvement, the Board generally includes related risk analysis and contingency plans among the matters addressed with management.

Business Planning, Financing and Liquidity. At the outset of each year, management reviews the Company's business plan with the Board and discusses risks that could affect the plan and measures to cope with such risks. We review updates to our business plan with our Board at least quarterly and discuss associated risks to meet plan. In addition, our Board oversees financing and liquidity risk by regularly monitoring our financial and liquidity position to ensure we maintain the financial resources needed to fund our homebuilding operations. At each quarterly meeting, management reviews information related to the Company's financial and liquidity position with the Board, which includes projected short and long-term financing and liquidity needs. To further manage risk in this area, incurrence of new debt above certain thresholds, significant changes to our unsecured credit facility, and public debt or equity issuances are approved by the Board.

Enterprise Risk. At least annually, management reviews key enterprise risks for the Company with both the Audit Committee and the full Board, which includes and analysis of both short term and long term risks associated with the Company's operations, liquidity, and financial condition. This discussion covers operational, financial, legal, and greater economic risks.

Regulatory Compliance, Legal Risk, Financial Reporting and Internal Control Compliance.

Legal and Compliance Risk. At least annually and throughout the year, management presents information to the Board and the Audit Committee regarding the Company's insurance programs and legal, regulatory, and compliance risks that might expose the Company to liability or loss. Management will also present to the Board or one of its committees on a variety of topics related to recent or anticipated changes to laws, regulations, and corporate governance issues. Management also presents on changes to accounting rules and regulations, tax laws and regulations, and financial reform rules and regulations to the Audit Committee. By staying informed, the Board and Audit Committee are able to oversee the Company's compliance with regulatory or legal issues areas presented and to discuss with management any actions necessary to maintain or become compliant with such regulatory matters.

Audit Committee Risk Oversight. The Audit Committee of the Board provides risk oversight with respect to financial reporting, internal control over financial reporting, internal audit and related regulatory compliance matters. The Audit Committee is responsible for overseeing the integrity of the Company's financial statements, the Company's accounting and financial reporting processes, the independent auditor's qualifications and independence, the performance of the Company's internal audit function and independent auditor, compliance with legal and regulatory requirements, key compliance risks and major financial and information technology risk exposures. Each quarter, our Audit

Committee discusses with our independent auditor its review of our interim financial information and, after our fiscal year-end, discusses its audit of our annual consolidated financial statements, including our procedures on internal control over financial reporting. Also, during the fiscal year, our Audit Committee meets in private session (without the presence of management) with our independent auditor and our internal audit provider to discuss any matters related to the audit of our annual consolidated financial statements and review of our internal control over financial reporting. Each year, the Audit Committee reviews and approves the internal audit plan for the forthcoming fiscal year. The internal audit plan is designed using a risk-based approach focusing on key risk areas in the Company's homebuilding, financial services and other operations. The Audit Committee is also responsible for reviewing and approving related party transactions. In March 2019, the Board formed the Related Party Review Committee to review transactions related to IHP in order to increase scrutiny and oversight over such related party transactions.

Compensation Risk Oversight. The Compensation Committee provides risk oversight with respect to compensation of the Company's employees, including the named executive officers and other key officers, with the assistance of the Board. The Compensation Committee performs a formal annual compensation risk assessment with the assistance of its independent compensation consultant, which includes a review of compensation-related risks at all levels of the organization, including those related to employees below the executive officer level. We regularly review the Company's compensation policies and practices and believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. We believe that our compensation program has the appropriate balance that properly incentivizes desired performance while mitigating inappropriate risk taking. The following components of our compensation programs help achieve this balance:

Corporate Governance Oversight. Our Nominating Committee provides oversight with respect to corporate governance and evaluates the independence of our directors and the effectiveness of our Corporate Governance Guidelines. In addition, during 2020, our Board was actively engaged in overseeing the rapidly shifting risk environment brought on by the COVID-19 pandemic. During the year, directors met formally eight times, more frequently than in prior years and devoted significant time and attention to risks related to the COVID-19 pandemic, including risks related to the health and safety of our employees, trade partners and customers, operational risks related to home sales and deliveries, and risks related to our balance sheet and liquidity.

The Company believes that the Lead Independent Director, the Board committees, all of which are chaired by and consist of independent directors, and the full Board of Directors, provide effective oversight of the Company's business and its risks.

Environmental, Social and Governance

Our Board oversees our long-term sustainability practices and our Nominating and Governance Committee oversees initiatives related to environmental, social and governance ('ESG') matters, including, in consultation with our management team, with respect to ESG disclosures and assessments of the effectiveness of our policies, programs and strategy regarding ESG matters. Consistent with our values,

we recognize the importance of ESG considerations to our stakeholders and continue to look for ways to incorporate ESG into our sustainability and other initiatives. During 2020, we released our inaugural Sustainability Report which is available on our website at ir.nwhm.com/investor-home. The information contained in, or that can be accessed through, our website is not incorporated by reference and is not a part of this proxy statement. Some of the ESG practices we focus on include human capital management, diversity and inclusion ('D&I') awareness, energy efficiency, workforce health and safety, and giving back to the community through involvement in charitable causes. The Company has also formed a D&I council comprised of volunteer employees at various levels throughout the Company, which council meets to discuss opportunities to increase education and awareness of D&I related issues. One recent initiative includes the implementation of a 'diversity calendar' that highlights important dates throughout the year that are related to accomplishments, sacrifices and celebrations of people from diverse backgrounds.

The Company is committed to creating and maintaining a community in which its employees are free from all forms of harassment and discrimination. We require employee training and protocols for preventing, reporting and addressing behavior that is not in line with our business standards or our core values, including, but not limited to, discriminatory or harassing behavior and sexual misconduct. We also recently rolled out dedicated training aimed at raising awareness about issues surrounding D&I. To ensure a positive and productive workplace, we proactively seek feedback from employees and continuously engage in two-way communication with our team members. We conduct an annual employee engagement survey soliciting direct feedback from our employees utilizing a third party survey and analytics provider. Our most recent survey, from November 2020, had approximately 99% participation and reflected that approximately 96% of our employees are positively engaged, which was up from 91% in the 2019 survey. This score is based on affirmative responses to factors such as being proud to work for the Company, a willingness to recommend the Company, an intent to stay with the Company for at the least the next 12 months, and achieving a feeling of personal accomplishment associated with the employee's work. Annually, our CEO shares results in person with all team members at divisional all-employee meetings and each division's leader is tasked with identifying improvement plans. The insights gained from our employee engagement surveys have helped us drive improvements in the way our employees work and engage with one another.

We believe it is important to adopt ethical practices to direct how we do business while keeping the interests of our stakeholders and the environment in mind, including valuing and challenging the talented men and women who comprise our workforce. To that end, we have the comprehensive Code of Business Conduct and Ethics applicable to all employees and an actively-managed ethics hotline. We also strive to provide a safe and healthy work environment for all employees. We have a health and safety audit system that includes comprehensive independent third-party inspections. Our Risk Management team has a training system and a safety enforcement system in place in the field, which we believe has led to an increase in safety awareness and effectiveness.

Expiration of Tax Benefit Preservation Plan

On May 8, 2020, the Company entered into a Tax Benefit Preservation Plan between the Company and American Stock Transfer & Trust Company, LLC, as rights agent (as amended from time to time, the 'Tax Plan') to help preserve the value of certain deferred tax benefits, including those generated by net operating losses and certain other tax attributes. The Company has been able to carryback its federal net operating losses realized during 2020 to offset U.S. federal income taxes paid in the past five years due to the tax law changes arising from the Coronavirus Aid, Relief, and Economic Security (the 'CARES Act'). As a result, the Board determined not to extend or renew the Tax Plan. The original expiration date of the Tax Plan was May 7, 2021; however, in March 2021, the Board determined to accelerate the expiration of the Tax Plan by amending it to allow its expiration to occur on March 29, 2021. Accordingly, the preferred share purchase rights under the Tax Plan (the 'Rights') which were previously dividended to holders of record of the shares of common stock of the Company related to the Series A Junior Participating Preferred Stock of the Company expired as of the close of business on March 29, 2021 and no person shall have any rights pursuant to the Tax Plan or the Rights. Due to its expiration, the Tax Plan is not being presented for stockholder approval at the Company's 2021 Annual Meeting of Stockholders.

Communication with our Board

Interested persons, including stockholders, may communicate with our Board, including the non-employee directors or the Lead Independent Director, by sending a letter to our Secretary at The New Home Company Inc., Attention: Secretary, 15231 Laguna Canyon Road, Suite 250, Irvine, California 92618. Our Secretary will submit all correspondence to the Chairman and to any specific director to whom the correspondence is directed.

Code of Business Conduct and Ethics

Our Board has adopted a Code of Business Conduct and Ethics that applies to all of our employees, executive officers and directors. Our Code of Business Conduct and Ethics can be found in the 'Investors' section on our website at https://www.NWHM.com. In addition, our Code of Business Conduct and Ethics is available in print to any stockholder who requests a copy. Please direct all requests to our Secretary at The New Home Company Inc., Attention: Secretary, 15231 Laguna Canyon Road, Suite 250, Irvine, California 92618. We intend to disclose future amendments to substantive provisions of our Code of Business Conduct and Ethics, or waivers of such provisions, applicable to our directors and executive officers, at the same location on our website identified above.

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS AND CERTAIN

BENEFICIAL OWNERS

The following table shows ownership of our common stock as of March 22, 2021, based on 18,109,101 shares of common stock outstanding on that date, by (i) each current director and nominee; (ii) each named executive officer; (iii) all of our current directors and executive officers as a group; and (iv) each person known to us to own beneficially more than five percent of our capital stock. Except to the extent indicated in the footnotes to the following table, the person or entity listed has sole voting and dispositive power with respect to the shares that are deemed beneficially owned by such person or entity, subject to community property laws, where applicable. H. Lawrence Webb, Wayne Stelmar, Joseph Davis and IHP (each a 'Group Member' and collectively, the 'Group Members') are party to the Investor Rights Agreement, as amended, pursuant to which the parties thereto may be deemed to be members of a 'group' within the meaning of Section 13(d)(3) of the Exchange Act.

Unless otherwise noted, the address of the persons or entities shown in the table below is 15231 Laguna Canyon Road, Suite 250, Irvine, California 92618.

_________________

* Less than 1%.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table shows, for the fiscal years ended December 31, 2020 and 2019, information regarding the compensation awarded to, earned by or paid to our named executive officers ('NEOs'), which for 2020 consisted of:

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Narrative to Summary Compensation Table

Components of Compensation

The individual components of our executive compensation program consist primarily of (i) base salary, (ii) annual cash-based bonus opportunity, (iii) long-term incentive compensation and (iv) retirement savings opportunities and limited other employee benefits. The Company's compensation program for its NEOs is intended to attract and retain qualified executives for the Company through fluctuating business cycles, provide them with incentives to achieve our strategic, operational and financial goals, increase shareholder value and reward long-term financial success.

Summary of Our Compensation Design and Governance Practices

What We Do

What We Do Not Do

Investor Outreach

Following our inaugural 2020 Say-on-Pay vote, where we received 77% support, the Chair of our Compensation Committee and senior management conducted comprehensive shareholder engagement with several of our institutional shareholders regarding our compensation and governance practices by reaching out to institutional shareholders representing approximately 16% of our outstanding shares at that time. We engaged shareholders that represented approximately 9% of our outstanding shares at that time. As part of our discussions, we reviewed a variety of topics including our corporate governance policies, our compensation philosophy and practices, and our executive compensation programs for fiscal 2019 and 2020. Among some of the feedback we received, investors noted a preference for a portion of long-term incentives tied to performance and increasing female representation on our Board of Directors. We reviewed this feedback with the Compensation Committee, Nominating Committee, and the full Board. In response to the feedback, we have taken the following actions: (i) reintroduced a performance-based component into the executive compensation program for 2021, which is discussed in more detail below under '2021 Executive Compensation Developments' and (ii) amended our Corporate Governance Guidelines in February 2021 to reflect the Board's and the Nominating Committee's commitment to using refreshment opportunities to consider new female and diverse director candidates to the Board of Directors.

Role of the Compensation Committee and its Independent Compensation Consultant

The Compensation Committee is responsible for reviewing and approving, on an annual basis, the corporate goals and objectives with respect to the compensation of our NEOs, as described in the Compensation Committee Charter. The Compensation Committee has engaged SBCG as its independent compensation consultant. SBCG's duties include preparation of material for the Compensation Committee's executive officer pay analysis, review of our peer group, recommendations for non-employee director compensation, discussion and analysis of potential incentive programs, risk assessment of the Company's compensation programs, and work on behalf of the Compensation Committee to review management's recommendations to the Compensation Committee about executive officer pay matters. In analyzing market compensation data for executives at public homebuilders, SBCG typically regresses such peer data to the Company's size given that most public homebuilders are significantly larger than the Company, particularly given consolidation in the industry in recent years. SBCG advised on the proposed terms and features of the Amended Plan (Proposal 2) and also reviewed and commented on the Company's 2020 proxy statement. For more information about the role of the Compensation Committee and its use of its Independent Compensation Consultant, see 'Corporate Governance-Board Committees-Compensation Committee'.

Pay Design and Compensation Elements

The Company completed its initial public offering in 2014. Since 2014, the Company has had an independent compensation committee that has been advised by SBCG, our independent compensation consultant. The Company's NEOs were initially made up of the Company's founders, including our current Executive Chairman, H. Lawrence (Larry) Webb. Over several years, several of the founders have transitioned and/or retired and the Company hired John Stephens as its CFO in mid-2015 and Leonard Miller, as Chief Operating Officer, in 2017. In August 2019, Mr. Webb transitioned from his role as CEO to Executive Chairman, and Mr. Miller succeeded him, becoming President and CEO. From its beginnings, as a founder-led company to its current structure, the Company's compensation design elements have matured. For example, the Company instituted use of performance-based equity ('PSUs') in its long term incentive program starting in 2018. However, due to challenges in the Company's operational environment during the 2019 and 2020 compensation years, including changes in the housing market, particularly for higher priced housing in California, the Compensation Committee reduced overall magnitude of target opportunities for its executive officers. At the same time, the Compensation Committee decided to discontinue the use of PSUs during this period given the then existing operational and strategic uncertainties, and replaced them with a mix of options as well as time-based RSUs to incent and retain our senior executives and allow for a longer time frame to meet objectives. This move away from long-term performance based incentive compensation is intended to be temporary. For the 2021 compensation year, the Compensation Committee has reintroduced performance-based long term incentives through a long term cash plan (which was selected over utilizing PSUs in order to manage dilution to our shareholders).

Our compensation programs have been comprised of the following compensation elements:

Overview of 2020 Executive Compensation Program Design

The Company continued to operate in a challenging operational environment when the Compensation Committee met in February 2020 to make 2020 compensation decisions due, in part, to a change in the markets in which the Company builds (particularly in California), the Company's transition to more affordable product offerings, and legacy assets with lower returns. As a result, the Company shifted some of its focus to strengthening its balance sheet, improving cash flow generation, and deleveraging during the 2019 year and into 2020. Accordingly, similar to its decisions for 2019 compensation, in February 2020, the Compensation Committee sought to reduce executive compensation spend and take into account the importance of other goals of the Company, including deleveraging and increasing cash flow, and implemented the following key elements for the 2020 compensation program:

The foregoing decisions regarding the executives' targets, including relative discounts thereto, were made in February 2020, before the onset of the COVID-19 pandemic.

2020 Compensation Decisions by Compensation Element

Base Salary

The Compensation Committee reviews executive compensation and formally approves the compensation program for the year during its February meeting. Typically, base salary increases, if any, are determined at this meeting. SBCG provided our Compensation Committee and Board with advice, including compensation data related to executives at public homebuilders, which the Compensation Committee considered in making its salary determinations. No increases to base salary were approved at the Compensation Committee's February 2020 meeting. Below sets forth the base salaries for each named executive officer for 2020.

Annual Cash Incentive

During its February 2020 meeting, in consultation with SBCG, the Compensation Committee reviewed market compensation data for executives at public homebuilders which used a regression analysis to account for the Company's smaller size. Following review of such market data, the Compensation Committee determined to target the named executive officers' annual cash incentive program as follows:

However, in light of the challenging operational environment for the Company and in an effort to reduce executive compensation costs, the Compensation Committee determined to reduce the bonus opportunity to 50% of the target level for target performance, for the second year in a row, as set forth in the table below. The maximum payout under the program for maximum performance level was set at 100% of the target bonus amounts set forth above.

In consultation with SBCG, the Compensation Committee also determined to restructure the design of its executive annual cash incentive program ('ACIP') for 2020. In 2019, the Company did not achieve the threshold pretax income goal and accordingly, the annual bonus compensation program yielded no bonuses to any of the NEOs and the Compensation Committee determined to pay the NEOs discretionary bonuses to reflect the significant progress that had been made with respect to other strategic goals in 2019. As a result, the Compensation Committee determined it was appropriate to incorporate some of these strategic goals in the ACIP for 2020.

The Compensation Committee, along with SBCG, developed a pre-established 'score card' which includes multiple key strategic measures for 2020 set forth in the table below. In order to be eligible to participate in the ACIP, the Company was required to meet a threshold goal of maintaining a maximum net debt-to-capital ratio of 50% at year-end, excluding the impact of any impairments in 2020. At the end of the year, the Compensation Committee had the ability to assess performance against each of the key measures and use those assessments to make year-end bonus decisions for the executives in its discretion. The Compensation Committee determined that this approach was appropriate because, similar to 2019, the funding of the 2020 bonuses would only be at 50% of the determined target levels for achieving target performance with a maximum payment pursuant to the program at 100% of the determined target for achieving maximum performance.

As a result of the unprecedented COVID-19 pandemic, starting in mid-March of 2020, management took immediate action to preserve capital, including halting construction of existing speculative homes under construction and placing a moratorium on all new construction starts as well as cutting selling, general and administrative overhead expenses. In addition, as capital preservation became a top priority for the Board and management during the first and second quarters of 2020, the Company made strategic decisions to (i) liquidate the remaining developable lots in a land development joint venture in Northern California which resulted in a $20.0 million other-than-temporary impairment charge in the 2020 second quarter, (ii) cease further development at a wholly owned community in Scottsdale, Arizona resulting in a $14.0 million project abandonment charge during the 2020 first quarter, and (iii) exit a land development joint venture in Southern California which resulted in a $2.3 million other-than-temporary impairment charge in the 2020 first quarter. By not continuing with these projects, the Company avoided capital outlays to help preserve capital for the future and will be able to seek valuable federal tax refunds due to the passage of the CARES Act.

These actions were necessary to ensure business continuity amid great economic uncertainty and to allow the Company to take advantage of valuable tax refunds, but the impairments taken during 2020 effectively made it impossible for management to achieve its pretax income target. In addition, because a large proportion of the Company's homes that deliver within any fiscal year are started during the same approximate period that the Company took defensive actions to limit new construction starts, the revenue and SG&A targets also became challenging to meet. The Compensation Committee considered the fact that if construction activity had been normalized during the first and second quarters of 2020 based on historical patterns, the Company would have been able to achieve both such targets. The Compensation Committee determined that the Company had met both its gross margin and strategic business objective targets (which, in the latter case, included the successful extension of its bank line and refinance of its senior notes, as well as its sale of the remaining assets of the identified large land development joint venture). In addition, the Company ended the year with a net debt-to-capital ratio of 41.0%* thereby meeting the threshold requirement under the APIC. As a result, 40% of the scorecard was achieved which amounted to incentive plan bonuses (at the reduced 50% funding) of $110,000 for Mr. Webb, $144,000 for Mr. Miller and $110,000 for Mr. Stephens.

In exercising its discretion, the Compensation Committee considered, among other things, that the performance criteria used to set the 2020 ACIP targets were established before the onset of the COVID-19 pandemic, which significantly disrupted the Company's business and required correspondingly significant adjustments to the Company's operations. In addition, as events associated with the pandemic unfolded, management took decisive action to respond to the disruption, first by promoting the safety and welfare of the Company's workforce by imposing travel restrictions, work-from-home requirements for certain employees, and safety and preventative measures at the Company's jobsites and sales offices, and then by taking measures to assure the Company's ongoing liquidity and financial stability through financing activities, cash generation and preservation initiatives which resulted in deleveraging, capital expense reductions, and cost control measures, some of which are referenced above. The Compensation Committee believes these actions helped to advance the Company's long-term performance and positioned the Company to achieve better results in the latter half of 2020 and into 2021.

Based on the above considerations, in addition to the amounts payable due to achievement of the gross margin and strategic business plan objective goals in the 'Scorecard,' the Compensation Committee approved additional cash bonuses for 2020 performance shown in the table below (shown alongside the target bonus at both 50% and 100% funding).

Equity Compensation

Overview and Background

As discussed in '-Overview of 2020 Executive Compensation and Program Design' above, the Compensation Committee determined to reduce the grant date value of the equity awards to executives for the second year in a row in order to reduce executive compensation spend and the dilutive impact to shareholders. In the interest of still providing a meaningful incentive to executives, the Compensation Committee decided to grant stock options instead of PSUs to give executives a longer time frame to achieve the Company's strategic goals (i.e. a ten year option exercise period vs. a PSU tied to specific financial measures over a 2-3 year period). When making the determinations for 2020 equity grants, the Compensation Committee began by establishing target long-term incentive values for each NEO as follows:

Targeted 2020 Equity Compensation

Discount on Actual 2020 Equity Grants

Similar to its February 2019 grants, in order to reduce the dilutive impact of the executive equity grant on shareholders, the Compensation Committee determined to reduce the executives' February 2020 equity grant value to about 60% of the targeted equity values shown above. Accordingly, because the grant value was significantly reduced and to allow for a more meaningful incentive and longer runway for the Company to achieve its strategic goals (i.e. a ten year option exercise period vs. a PSU tied to specific financial measures over a 2-3 year period), the Compensation Committee determined to grant executives a mix of time-based RSUs and stock options, consistent with 2019. The Compensation Committee also considered the importance of executive retention and motivation in making these awards. For 2020, the Compensation Committee determined to weigh the mix of RSUs to stock options more heavily in favor of RSUs due to the increased dilutive effect of stock options as compared to RSUs. The award comprised approximately 65% RSUs and 35% options. The Compensation Committee granted such stock options and RSUs on February 18, 2020 (two trading days following our 2019 fiscal year-end earnings release in accordance with the Company's equity grant practices policy). These RSU and stock option awards vest in equal annual installments on each of the first, second and third anniversaries of the grant date, subject to the grantee's continuous service with the Company. The table below summarizes the equity awards and associated values of the February 2020 grants all of which were granted under the Company's Amended and Restated 2016 Incentive Award Plan (the '2016 Plan').

Actual 2020 Equity Compensation

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2021 Executive Compensation Developments

During its regularly scheduled Compensation Committee meeting in February 2021, the Compensation Committee approved the compensation arrangements for Messrs. Webb, Miller and Stephens for the 2021 fiscal year, including the annual cash incentive program and long-term incentive program.

2021 Long-Term Compensation.

2021 Long-Term Cash Incentive Program.

Following discussions with the Company's institutional investors during its outreach after its inaugural 'Say on Pay' vote, the Compensation Committee determined to reintroduce a performance-based, long-term incentive component to its executive compensation program for 2021. In early 2021, the Compensation Committee approved a long-term cash incentive program based on the achievement of pre-established long term financial goals for 2021 and 2022 constituting approximately 50% of the executives' overall long-term compensation program. For the 2021 long-term incentive program, cash awards were selected over utilizing PSUs in order to manage dilution to our shareholders. In connection with establishing the 2021 long-term incentive program, the Compensation Committee approved a form of Cash Performance Award Agreement pursuant to which performance awards ('Performance Awards') were granted to the executive officers. Pursuant to the Cash Performance Award Agreement, each participant is eligible to vest in and receive an amount of cash equal to 0%-150% of the target Performance Award set forth in the table below ('Target Performance Award'), based on the achievement of average return on equity and average return on invested capital goals (each weighted at 50%) (the 'Performance Goals') during a two-year performance period commencing on January 1, 2021 and ending on December 31, 2022. The Target Performance Award for each executive officer is set forth in the table below:

The bonus payout opportunities for achievement of the Performance Goals are subject to the following payout schedule:

One-half of the earned portion of the Performance Award will vest on the last day of the performance period (i.e., December 31, 2022) and the remaining earned portion will vest on the first anniversary thereof (i.e., December 31, 2023), subject to the executive's continued service. Except as set forth below in 'Executive Compensation Arrangements Upon Certain Departures-Cash Performance Award Agreement', any portion of the Performance Award that remains unvested as of the date on which an executive's employment terminates, and any portion of the Performance Award that does not vest as a result of the failure to achieve the applicable Performance Goals, will be forfeited.

2021 Long-Term Time Based Compensation. As a counterpart to the approval of the long-term cash incentive plan, the Compensation Committee approved a grant of time-based restricted stock units under the 2016 Plan constituting approximately 50% of the executives' overall long-term compensation program opportunity, as set forth in the table below. Annual awards were granted based on a specified dollar amount, with the number of shares for each award determined by dividing the dollar amount by the closing market price of our stock on the grant date,

rounded down to the nearest whole unit. The Compensation Committee granted such RSUs on February 12, 2021 (two trading days following our 2021 fiscal year-end earnings release in accordance with the Company's equity grant practices policy). These RSU awards vest in equal annual installments on each of the first, second and third anniversaries of the grant date, subject to the grantee's continuous service with the Company.

2021 Annual Cash Incentive Plan

The 2021 target cash bonuses based on the foregoing performance criteria for each executive officer were approved by the Compensation Committee as set forth below:

2021 Salaries. The Compensation Committee approved increases in the annual base salary for Mr. Miller from $600,000 to $700,000 and for Mr. Stephens from $550,000 to $600,000, in each case, effective as of February 13, 2021. Mr. Webb's salary remains unchanged at $450,000. The Compensation Committee approved the foregoing increases following consultation with SBCG who provided the Compensation Committee with executive compensation information for public homebuilders. In reviewing such market information, the Compensation Committee determined increases were warranted to position the executives more competitively against the market.

Equity Grant Practices

It is the Company's policy that equity grants generally occur on pre-established dates, with employee annual grants generally occurring on the date that is two full trading days after the public release of fiscal year-end earnings, or (if during a time not around our fiscal year-end or quarterly earnings release) the Monday following the date the Compensation Committee approves the awards. The Compensation Committee approves annual awards for all employees. All new hire and promotion grants are also approved by the Compensation Committee. Such new hire and promotion awards are generally made effective on the latest of (i) approval by the Compensation Committee, (ii) the employee's date of hire/promotion or (iii) as of the first open trading day under the Company's insider trading policy after the employee's date of hire/promotion if such hire/promotion date is not open for trading under the Company's insider trading policy, as applicable. Annual and initial awards for non-employee directors are approved by the Company's Board of Directors, which may include automatic grants under a director compensation program or policy approved by the Board. Annual awards for directors are generally granted on the date of the applicable annual shareholder meeting. Initial awards are generally granted on the date the new director is appointed or elected to the Board, if such appointment date is a date that is open for trading under the Company's insider trading policy, or as of the first open trading day after the new director is appointed or elected if such date is not open for trading under the Company's insider trading policy. Annual awards are usually granted based on a specified dollar amount, with the number of shares for each award determined by dividing the dollar amount by the closing market price of our stock on the grant date, rounded down to the nearest whole unit; however in 2019 and 2020, the Compensation Committee fixed the number of shares to be granted to executives on the grant date in an effort to control the dilutive effect on stockholders. In addition, starting in 2018, the Company's RSU grant agreements provide that dividend equivalent payments are only be made if the underlying RSUs vest.

Clawback Policy

The Company maintains a clawback policy which requires certain cash and equity incentive compensation to be repaid to the Company by current and former executive officers meeting the definition set forth in Rule 16a-1(f) of the Exchange Act ('Covered Persons') if awarded in the event of the Company being required to prepare an accounting restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws as a result of willful, fraudulent, intentional or grossly negligent misconduct by such Covered Person or by the Company. The Clawback Policy also authorizes the Compensation Committee to recoup incentive compensation, including time-based equity, from any of the Company's employees and Covered Persons (a 'grantee') in the event such grantee has engaged in 'detrimental conduct' (including, among other things, the commission of an act of fraud, the unauthorized removal of Company property, any acts of violence, improper disclosure of Company information, failure to perform duties as described in a written document, a material breach of the Company's Code of Business Conduct and Ethics, any other act or omission which constitutes 'cause' for termination under an individual's employment or severance agreement, if any) for a period of 24 months following the date of the occurrence of such detrimental conduct. The Compensation Committee is authorized to implement and interpret the Company's Clawback Policy.

Employment Agreements

The Company has entered into employment agreements with each of Messrs. Webb, Miller, and Stephens which were amended and restated as of August 30, 2019 (the 'Amended Employment Agreements'). The initial term of the Amended Employment Agreement for Mr. Webb continued until August 30, 2020 and the initial terms of the Amended Employment Agreements for Messrs. Miller and Stephens will continue until August 30, 2022, in each case, unless earlier terminated. The Amended Employment Agreements are subject to automatic one-year renewal terms unless either the Company or the executive gives written notice of termination, in the case of Messrs. Miller and Stephens, at least 180 days prior to the end of the applicable term, or in the case of Mr. Webb, at least 90 days prior to the end of the applicable term. See '-Executive Compensation Arrangements Upon Certain Departures' for a detailed discussion of accelerated vesting upon certain departures from service with us.

The Amended Employment Agreements also provide for:

The Amended Employment Agreements also contain customary employee non-solicitation provisions that apply during the term of the agreements and for two years after the termination of the executive's employment. The Amended Employment Agreements also contain standard confidentiality provisions that apply during the term of the agreements and after the termination of the executive's employment.

Other Elements of Compensation

We maintain a 401(k) retirement savings plan for our employees, including our NEOs, who satisfy certain eligibility requirements. Currently, we match contributions made by participants in the 401(k) plan up to a specified percentage of the employee contributions, and these matching contributions vest ratably depending on length of service with the Company.

All of our full-time employees, including our NEOs, are eligible to participate in our health and welfare plans, including: medical, dental and vision benefits; medical and dependent care flexible spending and health savings accounts; short-term and long-term disability insurance; and life insurance. We believe these health and welfare benefits are necessary and appropriate to provide a competitive compensation package to our NEOs and employees generally.

During the 2020 fiscal year, certain members of management, including NEOs, were eligible for up to $1,200 in reimbursements annually for mobile phone usage and a car allowance of up to $7,200 annually. NEOs may also be reimbursed for highway toll charges.

We do not maintain any defined benefit pension plans or nonqualified deferred compensation plans.

No Tax Gross-Ups

We do not make gross-up payments to cover our NEOs' personal income taxes that may pertain to any of the compensation paid or provided by us.

Executive Compensation Arrangements Upon Certain Departures

Under the current employment agreements with our NEOs, we pay the following amounts upon qualifying departures from service with us. We may terminate the employment of such individuals at any time with or without cause, and the executive may terminate his employment with or without good reason.

Termination for cause or resignation without good reason.

If we terminate an executive's employment for cause, or if the executive officer resigns without good reason, the executive officer will be entitled to receive any earned but unpaid annual base salary, any earned but unpaid prior-year bonus, reimbursement of expenses incurred prior to the date of termination, accrued vacation and any other paid-time-off and any benefits that have been earned and accrued prior to the date of termination (referred to as the 'Earned Benefits').

Termination without cause or resignation for good reason or due to disability or death; Termination in the event of a Change in Control

Employment Agreements. If we terminate an executive officer's employment without cause or if the executive officer terminates his employment for good reason or due to disability or death, the executive officer will be entitled to receive the Earned Benefits. In addition, the Amended Employment Agreements also provide for severance in the event of a termination without 'cause' or for 'good reason', each as defined in the Amended Employment Agreements, including on or within 24 months following a change in control (such termination a 'CIC Termination'), such that the executive is entitled to one times (or, for a CIC Termination, two times), the sum of (i) his annual base salary plus (ii) the greater of his target cash bonus or an average of the last three years cash bonuses paid. In the event of a termination without cause or for good reason, including a CIC Termination, or due to death or 'disability', as defined in the Amended Employment Agreements, the executive and his dependents are entitled to Company-paid healthcare continuation coverage for up to 12 months after the termination date. Receipt of the foregoing severance benefits or payments is subject to the delivery and non-revocation of a general release of claims in favor of the Company. Further, the Amended Employment Agreements provide that if a change in control of the Company occurs, the term automatically will be extended to, in the case of Messrs. Miller and Stephens, the second anniversary of the change in control, or in the case of Mr. Webb, the anniversary of the change in control.

Equity Award Agreements. Our forms of RSU and stock option agreements provide for accelerated vesting in the event of certain executive departures.

All RSUs granted to executives that are currently outstanding have been granted under the 2016 Plan. The agreements under the 2016 Plan do not provide for vesting upon the executive's retirement or 'single trigger' vesting immediately prior to a change in control. On February 11, 2019, the Compensation Committee adopted a revised form of restricted stock unit award agreement, the 2019 RSU Agreement, for RSUs granted to the executive officers commencing in 2019 under the 2016 Plan. The 2019 RSU Agreement differs from prior RSU agreements in that it provides that in the event the grantee's employment is terminated without 'cause' or for 'good reason', in either case, on or within 24 months following a change in control, then the restricted stock units will accelerate and become fully vested as of the date of termination. The Compensation Committee also approved an amendment to restricted stock unit awards granted pursuant to the 2016 Plan that were outstanding as of February 11, 2019, such that the awards will vest in full on a termination of service without 'cause' or for 'good reason', in either case, that occurs on or within 24 months following a change in control.

Under our 2019 Stock Option Agreement, upon the executive's termination of service without 'cause' or for 'good reason', or a termination of service due to death or disability, then the stock option will vest and become exercisable with respect to the number of shares underlying the option that would have become vested and exercisable on the first vesting date after such termination of service, had the executive remained in service through such date. However, if such termination without cause or for good reason occurs on or within 24 months following a change in control, then the option will accelerate and become fully vested and exercisable as of the date of termination. If the executive's service is terminated due to his 'retirement', then the option will vest and become exercisable with respect to the number of shares underlying the option equal to (i) the number of shares underlying the option that would have become vested and exercisable on the first vesting date after such termination of service, had the executive remained in service through such date, multiplied by (ii) the product of (A) 1/12, and (B) the number of whole months between the vesting date immediately preceding such termination of service and the date of termination.

Cash Performance Award Agreement. In February 2021, our Compensation Committee adopted a form of Cash Performance Award Agreement (the 'Performance Agreement') pursuant to which target long-term cash performance awards were granted to executive officers which vest 50% over a two-year performance period and 50% in the third year following the grant date subject to achievement of defined performance criteria. If the executive experiences a termination of employment without 'cause' or for 'good reason' or due to death or disability during the performance period, then the executive will vest in the target performance award, pro-rated based on the amount of time the executive was employed over the performance period. If any such termination occurs following the performance period, the executive will vest in a pro-rated portion of the earned performance award that remains unvested as of the termination date. In addition, if the executive's employment is terminated due to his 'retirement' during the performance period, then the performance award will remain outstanding and eligible to vest based on the achievement of performance goals over the performance period and will be pro-rated based on the amount of time the executive was employed over the performance period. If a change in control occurs following the executive's retirement, then the

pro-ration will be applied to the target performance award. If the executive's employment is terminated due to his 'retirement' after the performance period, the executive will vest in a pro-rated portion of the earned performance award that remains unvested as of his retirement. In addition, if the Company undergoes a change in control during the performance period and the award is not assumed, then the target performance award will vest in full. In the event the performance award is assumed in connection with a change in control, then the target performance award will be earned and will remain outstanding to vest as to 50% on each of (i) the last day of the performance period and (ii) the first anniversary of the last day of the performance period, subject in each case to executive's continued service. If the Company undergoes a change in control after the performance period and the performance award is not assumed, the executive will vest in the portion of the performance award that remains unvested as of such change in control.

Prohibitions on Hedging and Pledging Company Stock

In order to avoid creating conflicts between an executive's interests and those of other stockholders, our Insider Trading Policy prohibits all covered persons, including executives, from hedging the economic risk of owning Company shares and does not allow pledging of Company stock.

Executive Stock Ownership Guidelines

In November 2016, the Compensation Committee adopted stock ownership guidelines applicable to the Chief Executive Officer and all other executive officers. These guidelines were slightly modified on July 2020. Under these guidelines, as amended, each executive officer must hold 100% of all 'net shares' received from the vesting, delivery or exercise of equity awards granted by us until the executive beneficially owns shares of our common stock equal to six times base salary, in the case of the Executive Chairman, three times base salary, in the case of the Chief Executive Officer, and two times the base salary in the case of any other executive officer (the 'executive ownership threshold'). The 'net shares' means those shares of common stock that remain after payment, as applicable, of (i) the exercise price of stock options or purchase price of other awards and all applicable withholding taxes, including shares sold or netted with respect thereto, and (ii) all applicable transaction costs. To determine the number of shares required to meet the executive ownership threshold, we use (1) with respect to shares of Company common stock underlying equity awards granted to the executive by the Company, the per share price that was used to value such equity awards when granted or the current market price per share, whichever is greater and (2) with respect to shares of Company common stock otherwise acquired, the Company common stock is valued at the greater of the executive's cost basis and the current market price per share. Each executive is expected to attain the ownership threshold within five years of becoming subject to the guidelines; provided that in the event an executive's ownership threshold multiple is increased, the five-year period during which the executive is expected to attain the ownership threshold shall restart on the date such multiple has been increased. In addition, in the event of an increase in base salary that has the effect of increasing the executive ownership threshold, the executive shall then be required to hold 100% of such executive's net shares until such time that such increased executive ownership threshold is met and shall not be deemed to be 'out of compliance' with this policy unless he or she sells shares prior to reaching such increased executive ownership threshold. Mr. Webb already owns shares in excess of his executive ownership threshold. Each of Messrs. Miller and Stephens' thresholds were increased on August 30, 2019 and Mr. Miller's threshold multiple was also increased on such date; accordingly each officer is given additional time to meet compliance with the stock ownership guidelines. Neither executive has sold any stock and we expect that they will be able to achieve the guidelines within the required timeframe.

Outstanding Equity Awards at Fiscal Year End

The following tables set forth summary information regarding the outstanding equity awards held by our named executive officers as of December 31, 2020:

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EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of December 31, 2020, about compensation plans under which shares of our common stock may be issued to employees, consultants or non-employee directors of our Board upon exercise of options or vesting of RSUs or under any other rights under all of our existing equity compensation plans.

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PROPOSAL 2

APPROVAL OF THE SECOND AMENDED AND RESTATED 2016 INCENTIVE AWARD PLAN

Background

On March 10, 2021, our Board adopted the Second Amended and Restated The New Home Company Inc. 2016 Incentive Award Plan (the 'Amended Plan'), which makes the following material changes to the existing Amended and Restated The New Home Company Inc. 2016 Incentive Award Plan (the '2016 Plan'):

The Amended Plan, if approved by our stockholders, will become effective on the date of this annual meeting. If the Amended Plan is not approved within twelve months of the date of Board adoption, the 2016 Plan shall continue on its existing terms and conditions. A copy of the Amended Plan is included as Appendix A to this proxy statement.

Stockholder Approval Requirement

Approval of the Amended Plan will constitute approval pursuant to the stockholder approval requirements of Section 422 of the Internal Revenue Code (the 'Code') relating to incentive stock options (to the extent required by the Code) and approval pursuant to the NYSE stockholder approval requirements applicable to equity compensation plans.

If our stockholders do not approve the Amended Plan pursuant to this Proposal 2, then the Amended Plan will not become effective and the proposed additional shares under the Share Reserve Increase will not become available for issuance and the new ISO Limit will not be approved. In addition, although stockholder approval of the new Individual Limits and the new Director Limit is not required under the stockholder approval requirements of the NYSE, if stockholders do not approve the Amended Plan, the current Individual Limits and Director Limit contained in the 2016 Plan will remain in effect and will continue to limit the aggregate compensation payable pursuant to existing limits. Finally, if our stockholders do not approve the Amended Plan pursuant to this Proposal 2, then the other material changes described above, including the fungible share ratio, will not come into effect.

Shares Available for Issuance

The Amended Plan increases the reserved shares under the 2016 Plan by 1,900,000 shares (which is equal to approximately 1,580,000 full value shares due to the fungible share ratio). By increasing the share reserve, we will be able to continue to grant equity awards to help create long-term participation in the Company and, thereby, attract, retain, motivate and reward our employees and directors. The Board believes that the effective use of stock-based long-term incentive compensation has been integral to the Company's success in the past and the effective use of those awards, along with performance-based cash incentive awards, is vital to its ability to achieve continued strong performance in the future. In addition, the use of long-term equity grants allows the Company to align the incentives of our

employees and directors with the interests of its stockholders. If our stockholders approve this Proposal 2, we anticipate we will have sufficient shares to provide equity awards to attract, retain and motivate employees for approximately the next three years. Accordingly, the Board believes that approval of the Amended Plan is in the best interests of the Company and the Board recommends that stockholders vote for approval of the Amended Plan.

Prior to originally adopting the 2016 Plan, we only maintained one equity incentive award plan, The New Home Company Inc. 2014 Long-Term Incentive Plan (the '2014 Plan'), which we adopted in connection with our initial public offering in 2014. As originally adopted, the 2014 Plan permitted the issuance of up to 1,644,875 shares. We will continue to be able to grant equity awards under the 2014 Plan until we have exhausted the share reserve under that plan (or the plan earlier is terminated by the Board or pursuant to its terms).

The table below sets forth the number of shares currently available and outstanding under all of the Company's equity compensation plans, including the 2016 Plan and the 2014 Plan, as of March 22, 2021.

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As of March 22, 2021, we had 18,109,101 shares of common stock issued and outstanding. The closing price of our common stock on March 22, 2021 was $5.28.

Background of Reasons for and the Determination of Shares Under the Amended Plan

In its determination to approve the Amended Plan, the Board was primarily motivated by a desire to ensure the Company has an available pool of shares from which to grant long-term equity incentive awards, which we believe provides a primary incentive and retention mechanism for our employees and directors. In determining the number of shares by which to increase the reserve under the Amended Plan, the Board reviewed the compensation committee's recommendations, which were based on an analysis prepared by and recommendations of SBCG, the Compensation Committee's independent compensation consultant.

In determining whether to approve the Amended Plan, including the Share Reserve Increase, our Board of Directors considered the following:

Other factors that stockholders may consider in evaluating the proposal to approve the Amended Plan include:

In light of the factors described above, and the fact that the ability to continue to grant equity compensation is vital to our ability to continue to attract and retain employees in the competitive labor markets in which we compete, the Board has determined that the size of the share reserve under the Amended Plan is reasonable and appropriate at this time.

In evaluating the proposal to approve the Amended Plan, stockholders may also consider the provisions in the Amended Plan which we believe are consistent with best practices in equity compensation and which we believe further protect our stockholders' interests. Such factors include:

Description of the Amended Plan

The following sets forth a description of the material features and terms of the Amended Plan. The following summary is qualified in its entirety by reference to the full text of the Amended Plan, which is attached hereto as Appendix A.

Administration. The Amended Plan is administered by the compensation committee (or by the Board or another Board committee as may be determined by the Board from time to time). The administrator of the Amended Plan (the 'Administrator') has the authority to interpret the Amended Plan, determine the types and number of awards, the number of shares to be awarded, to approve all awards made under the Amended Plan, and carry out other functions as set forth in the Amended Plan.

Eligibility. Employees and non-employee directors of the Company or any of its subsidiaries (as defined in the Amended Plan) are eligible to participate in the Amended Plan. The Administrator determines the type and size of the award and sets the terms, conditions, restrictions and limitations applicable to the award, within the confines of the Amended Plan's terms. As of March 22, 2021, approximately 223 employees and seven non-employee directors were eligible to receive awards under the Amended Plan; however, this number is subject to change as the number of individuals in our business is adjusted to meet our operational requirements.

Award Limits. If this Proposal 2 is approved, the maximum aggregate number of shares of Common Stock that may be subject to awards granted under the Amended Plan will be increased from 2,100,000 shares to 4,000,000 shares plus, subject to certain limitations, shares covered by awards granted under the Amended Plan that are forfeited, expire or lapse, or are repurchased for or paid in cash. For additional information about the shares which may be added to the shares of Common Stock authorized for issuance under the Amended Plan, see the discussion below under the headings 'Description of the Amended Plan - Share Counting Provisions' and 'Description of the Amended Plan - Fungible Share Ratio.' The Amended Plan also includes annual limits on awards that may be granted to any individual participant. Under the Amended Plan, if the award is denominated in shares of Common Stock, the maximum aggregate number of shares of Common Stock that may be granted to any one person is 750,000 per year. Under the Amended Plan, if the award is payable in cash and not denominated in shares of Common Stock, the maximum aggregate amount of cash that may be paid to any one person is $7,000,000 per year. In addition, under the Amended Plan, the maximum aggregate cash compensation and grant date fair value of awards which may be granted to a non-employee director is $500,000 per year.

Fungible Share Ratio. After the effectiveness of the Amended Plan, each share subject to an award of stock options or stock appreciation rights will reduce the share reserve under the Amended Plan by one share and each share subject to any other award, such as restricted stock units or performance stock units (which we refer to as 'full value awards'), will reduce the Amended Plan's share reserve by 1.2 shares. In addition, each share subject to a full value award (including full value awards that are outstanding at the effectiveness of the Amended Plan) will be added back to the Amended Plan's share reserve at 1.2 shares for each share that is forfeited, expires, lapses or is repurchased for or paid in cash after the effectiveness of the Amended Plan.

Share Counting Provisions. In general, when awards granted under the Amended Plan expire, lapse, are forfeited or are paid in cash, the shares reserved for those awards are returned or added, as applicable, to the share reserve and available for future issuance under the Amended Plan. However, the Amended Plan does not allow the share pool available for incentive grants to be recharged or replenished with shares that:

Types of Awards. The Amended Plan authorizes the grant of the following types of incentive awards to eligible individuals: incentive stock options, non-qualified stock options, restricted stock awards, restricted stock unit awards, dividend equivalents, stock appreciation rights, and other stock or cash based awards; any of which may be awarded in accordance with the terms of the Amended Plan. Awards to eligible individuals will be subject to the terms of an individual award agreement between the Company and the individual.

Stock Options. Stock options may be granted under the Amended Plan, including both incentive stock options and non-qualified stock options, which provide the holder a right to purchase shares of Common Stock at a specified exercise price. The exercise price per share for each stock option will be set by the Administrator, but may not be less than the fair market value on the date of the grant. The Administrator will determine the time period for exercise of each award, including the time period for exercise following a termination of service by the recipient, subject to a 10-year limitation.

Incentive Stock Options. Incentive stock options may be granted only to employees of the Company. No person who qualifies as a greater-than-10% stockholder of the Company may be granted an incentive stock option, unless such incentive stock option conforms to the applicable provisions of Section 422 of the Code. If this Proposal 2 is approved, the maximum number of shares that can be granted as incentive stock options will be increased from 2,100,000 shares to 4,000,000 shares.

Non-Qualified Stock Options. Non-qualified stock options may be granted only to employees and directors of the Company. With the consent of the holder, the Administrator is authorized to modify any incentive stock option granted under the Amended Plan to disqualify the option from treatment as an incentive stock option under Section 422 of the Code.

Restricted Stock. The Administrator may make awards of restricted stock to eligible individuals in such amounts and at purchase prices to be established by the Administrator in connection with each award. Such awards will be subject to restrictions and other terms and conditions as are established by the Administrator. Upon issuance of restricted stock, recipients generally have the rights of a stockholder with respect to such shares, subject to the limitations and restrictions established by the Administrator in the award program or the individual award agreement. Such rights generally include the right to receive dividends and other distributions in relation to the award; however, no dividends are payable with respect to restricted stock with vesting conditions unless and until the vesting conditions with respect to such restricted stock have been satisfied. Except as otherwise determined by the Administrator, restricted stock awards will lapse and immediately be surrendered to the Company without payment of consideration if the recipient terminates service to the Company before the restrictions on the award have expired.

Restricted Stock Units. The Amended Plan authorizes awards of restricted stock units to eligible individuals in amounts and at purchase prices and upon such other terms and conditions as are established by the Administrator for each award. Restricted stock unit awards entitle recipients to acquire shares of the Company's Common Stock in the future under certain conditions. Holders of restricted stock units generally have no rights of ownership or as stockholders in relation to the award, unless and until the restrictions lapse and the restricted stock unit award vests in accordance with the terms of the grant and actual shares are issued in settlement of the award. If the Administrator provides, restricted stock units can be granted in tandem with dividend equivalents, which are described below, however, no dividend equivalents are payable with respect to restricted stock units with vesting conditions unless and until the vesting conditions have been satisfied.

Dividend Equivalents. Dividend equivalents may be granted by the Administrator based on the dividends declared on Common Stock of the Company between the date of the award and the date that the award vests, is exercised, distributed or expires. Dividend equivalents are converted to cash or additional shares of stock based on terms and limitations established by the Administrator. In addition, dividend equivalents with respect to an award that are based on dividends paid prior to the vesting of such award will only be paid out to the holder to the extent that the vesting conditions with respect to such restricted stock are subsequently satisfied and the award vests.

Stock Appreciation Rights. The Administrator is authorized to grant stock appreciation rights to eligible recipients in its discretion, on such terms and conditions as it may determine, consistent with the Amended Plan. A stock appreciation right entitles the holder to exercise the stock appreciation right to acquire shares of the Company's stock upon exercise within a specified time period from the date of the grant. Subject to the provisions of the stock appreciation right award agreement, the recipient may receive from the Company an amount determined by multiplying the difference between the exercise price per share of the stock appreciation right and the fair market value of the share on the date of exercise by the number of shares of Common Stock subject to the award. The Administrator will determine the time period for exercise of each award, including the time period for exercise following a termination of service by the recipient, subject to a ten year limitation.

Other Stock or Cash Based Awards. The Administrator is authorized to make other stock or cash based awards to any eligible individual under the Amended Plan. Such stock or cash based awards may be made in lieu of base salary, cash incentives, fees or other cash compensation otherwise payable to the recipient. Subject to the provisions of the Amended Plan, the number or value of shares to be awarded, conditions and criteria for vesting, and the vesting schedule, will be set by the Administrator.

Performance-Based Awards. The Administrator may, with respect to an award, establish performance goals to be attained for a performance period, which may include, but are not limited to the following individual criteria: (i) the attainment by a share of a specified Fair Market Value (as defined in the Amended Plan) for a specified period of time; (ii) book value per share; (iii) earnings per share; (iv) return on assets; (v) return on equity; (vi) return on investments; (vii) return on invested capital; (viii) total stockholder return; (ix) earnings or net income of the Company before or after taxes and/or interest; (x) earnings before interest, taxes, depreciation and amortization; (xi) revenues; (xii) market share; (xiii) cash flow or cost reduction; (xiv) interest expense after taxes; (xv) economic value created; (xvi) improvements in capital structure; (xvii) gross margin; (xviii) operating margin; (xix) net cash provided by operations; (xx) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion goals, cost targets, customer satisfaction, reductions in errors and omissions, reductions in lost business, management of employment practices and employee benefits,

supervision of litigation and information technology, quality and quality audit scores, efficiency, working capital, goals relating to acquisitions or divestitures, land management, net sales or closings, inventory control, inventory, land or lot improvement or reduction, implementation or completion of critical projects, economic value; (xxi) adjusted earnings or loss per share; (xxii) employee satisfaction; (xxiii) certain financial ratios (including those measuring liquidity, activity, profitability or leverage); (xxiv) debt levels, covenants, ratios or reductions; (xxv) financing and other capital raising transactions; (xxvi) year-end cash; (xxvii) investment sourcing activity; (xxviii) marketing initiatives or (xxix) any combination of the foregoing, any of which may be measured either in absolute terms or as compared to any incremental increase or decrease or as compared to results of a peer group or to market performance indicators. The Amended Plan also permits the Administrator to provide for objectively determinable adjustments to the applicable performance criteria in setting performance goals for awards.

Prohibition on Option or SAR Reload Features. Under the Amended Plan, the Administrator may not grant stock options or stock appreciation rights that have reload features under which the exercise of such stock option or stock appreciation right by a participant automatically entitles the participant to a new stock option or stock appreciation right.

Prohibition on Re-Pricing and Cash Buyouts. Under the Amended Plan, the Administrator may not, without the approval of the stockholders of the Company, authorize the re-pricing of any outstanding option or stock appreciation right to reduce its exercise price per share, or cancel any option or stock appreciation right in exchange for cash or another award when the exercise price per share exceeds the Fair Market Value (as that term is defined in the Amended Plan) of the underlying shares.

Change in Control. In general, notwithstanding a Change in Control event (as that term is defined in the Amended Plan), each outstanding award will continue in effect or be assumed or an equivalent award substituted by the successor corporation. No single-trigger vesting acceleration applies under the Amended Plan in connection with a change in control. However, in the event the successor corporation refuses to assume or substitute for the award, such award will become fully vested and, if applicable, exercisable immediately prior to the consummation of the transaction and all forfeiture restrictions to lapse, and so notify the holder. If this Proposal 2 is approved, performance-based awards will vest at 'target' if the successor corporation does not assume or substitute for the award (unless otherwise provided in an applicable award agreement).

Certain Transactions. The Administrator has broad discretion to equitably adjust the provisions of the Amended Plan, as well as the terms and conditions of existing and future awards, to prevent the dilution or enlargement of intended benefits and facilitate necessary or desirable changes in the event of certain transactions and events affecting our Common Stock, such as stock dividends, stock splits, combinations or exchanges of shares, mergers, consolidations or other distributions (other than normal cash dividends) of Company assets to stockholders. In addition, in the event of certain non-reciprocal transactions with our stockholders known as 'equity restructurings,' the Administrator will make equitable adjustments to outstanding awards.

Minimum Vesting. The Amended Plan contains a minimum vesting requirement, subject to limited exceptions, that awards made pursuant to the Amended Plan may not vest earlier than the date that is one year following the grant date of the award. The limited exceptions allow (i) the issuance of awards in an aggregate of up to 5% of the shares available to be granted without minimum vesting provisions, and (ii) the Administrator to waive the one-year vesting restrictions upon the participant's termination of service due to death or disability or in connection with a change in control. Annual grants to non-employee directors may also be exempt from the minimum vesting requirement if the director is not reelected at a subsequent annual meeting of the Company's stockholders; provided that the period between the grant date and such annual meeting is not less than 50 weeks. If this Proposal 2 is approved, the Administrator will not be permitted to waive the one-year vesting restrictions upon a participant's retirement unless such award counts against the 5% pool of shares available to be granted without minimum vesting provisions.

Termination of or Changes to the Amended Plan. The Board has the authority to amend, suspend, or discontinue the Amended Plan subject to any stockholder approval that is required by applicable law or listing agency rules. The Administrator may amend outstanding awards in any manner that would be permitted for a new award, provided that any amendment that is adverse to a participant requires the participant's consent. No award may be granted under the Amended Plan after ten years from the earlier of (i) the date the Board adopted the Amended Plan or (ii) the date the Company's stockholders approved the Amended Plan. The applicable provisions of the Amended Plan and the Compensation Committee's authority will continue with respect to any awards then outstanding.

Clawbacks. All awards made under the Amended Plan are subject to any claw-back policy implemented by the Company, including any clawback policy adopted to comply with the requirements of applicable law (including the Dodd Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder).

Tax Consequences

The following is a general summary under current law of the principal United States federal income tax consequences related to awards under the Amended Plan. This summary addresses the general federal income tax principles that apply and is provided only for general information. Some kinds of taxes, such as state, local and foreign income taxes and federal employment taxes, are not discussed. This summary is not intended as tax advice to participants, who should consult their own tax advisors.

Non-Qualified Stock Options. If an optionee is granted an NSO under the Amended Plan, the optionee should not have taxable income on the grant of the option. Generally, the optionee should recognize ordinary income at the time of exercise in an amount equal to the fair market value of the shares acquired on the date of exercise, less the exercise price paid for the shares. The optionee's basis in the common stock for purposes of determining gain or loss on a subsequent sale or disposition of such shares generally will be the fair market value of our Common Stock on the date the optionee exercises such option. Any subsequent gain or loss will be taxable as a long-term or short-term capital gain or loss. We generally should be entitled to a federal income tax deduction at the time and for the same amount as the optionee recognizes ordinary income.

Incentive Stock Options. A participant receiving ISOs should not recognize taxable income upon grant. Additionally, if applicable holding period requirements are met, the participant should not recognize taxable income at the time of exercise. However, the excess of the fair market value of the shares of our Common Stock received over the option exercise price is an item of tax preference income potentially subject to the alternative minimum tax. If stock acquired upon exercise of an ISO is held for a minimum of two years from the date of grant and one year from the date of exercise and otherwise satisfies the ISO requirements, the gain or loss (in an amount equal to the difference between the fair market value on the date of disposition and the exercise price) upon disposition of the stock will be treated as a long-term capital gain or loss, and we will not be entitled to any deduction. If the holding period requirements are not met, the ISO will be treated as one that does not meet the requirements of the Code for ISOs and the participant will recognize ordinary income at the time of the disposition equal to the excess of the amount realized over the exercise price, but not more than the excess of the fair market value of the shares on the date the ISO is exercised over the exercise price, with any remaining gain or loss being treated as capital gain or capital loss. We are not entitled to a tax deduction upon either the exercise of an ISO or upon disposition of the shares acquired pursuant to such exercise, except to the extent that the participant recognizes ordinary income on disposition of the shares.

Other Awards. The current federal income tax consequences of other awards authorized under the Amended Plan generally follow certain basic patterns: SARs are taxed and deductible in substantially the same manner as NSOs; nontransferable restricted stock subject to a substantial risk of forfeiture results in income recognition equal to the excess of the fair market value over the price paid, if any, only at the time the restrictions lapse (unless the recipient elects to accelerate recognition as of the date of grant through a Section 83(b) election); restricted stock units, dividend equivalents, cash awards and other stock awards are generally subject to tax at the time of payment.

Excess Parachute Payments. Section 280G of the Code limits the deduction that the employer may take for otherwise deductible compensation payable to certain individuals if the compensation constitutes an 'excess parachute payment.' Excess parachute payments arise from payments made to disqualified individuals that are in the nature of compensation and are contingent on changes in ownership or control of the employer or certain affiliates. Accelerated vesting or payment of awards under the Amended Plan upon a change in ownership or control of the employer or its affiliates could result in excess parachute payments. In addition to the deduction limitation applicable to the employer, a disqualified individual receiving an excess parachute payment is subject to a 20% excise tax on the amount thereof. The Amended Plan does not provide for any excise tax gross-ups.

Application of Section 409A of the Code. Section 409A of the Code imposes an additional 20% tax and interest on an individual receiving non-qualified deferred compensation under a plan that fails to satisfy certain requirements. For purposes of Section 409A, 'non-qualified deferred compensation' includes equity-based incentive programs, including some stock options, stock appreciation rights and restricted stock unit programs. Generally speaking, Section 409A does not apply to incentive stock options, non-discounted non-qualified stock options and appreciation rights if no deferral is provided beyond exercise, or restricted stock.

The awards made pursuant to the Amended Plan are expected to be designed in a manner intended to comply with the requirements of Section 409A of the Code to the extent the awards granted under the Amended Plan are not exempt from coverage. However, if the Amended Plan fails to comply with Section 409A in operation, a participant could be subject to the additional taxes and interest.

Registration with the Securities and Exchange Commission

If the Amended Plan is approved by stockholders, we expect to file a Registration Statement on Form S-8 with the Securities and Exchange Commission to register the additional number of shares of common stock that will be issuable under the Amended Plan.

New Plan Benefits

Except with respect to grants of $60,000 of restricted stock units that will be awarded to each of the non-employee directors serving on our Board on the date of this Annual Meeting immediately prior to the effectiveness of the Amended Plan, shown in the table below, the number of awards that our named executive officers, directors, other executive officers and other employees may receive under the Amended Plan in the future will be determined in the discretion of the Board or Compensation Committee, and neither the Board nor the Compensation Committee has made any determination to make future grants to any persons under the Amended Plan as of the date of this proxy statement. Therefore, it is not possible to determine the future benefits that will be received by these participants under the Amended Plan. For information regarding the grants made under the 2016 Plan for 2020 to our named executive officers, see 'Executive Compensation-Narrative to Summary Compensation Table-2020 Equity Compensation'. For information regarding grants made under the 2016 Plan during 2020 to our non-employee directors, see the table entitled 'Non-Employee Director Compensation Table' in the section entitled 'Compensation of Directors'.

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The table set forth below shows awards made to the individuals below under the 2016 Plan in 2020:

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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE 'FOR' PROPOSAL 2. UNLESS YOU GIVE CONTRARY INSTRUCTIONS, THE SHARES REPRESENTED BY YOUR RETURNED EXECUTED PROXY WILL BE VOTED 'FOR' THE APPROVAL OF PROPOSAL 2.

Assuming the presence of a quorum at the Annual Meeting, under our Bylaws, the affirmative vote of a majority of the Shares present in person or by proxy and entitled to vote on the proposal is necessary for its approval. As a result, abstentions will be treated as votes against the proposal, whereas broker non votes will have no effect on the outcome of the vote.

PROPOSAL 3

ADVISORY VOTE ON THE COMPENSATION OF NAMED EXECUTIVE OFFICERS

Background to the Advisory Vote

We are required by the Exchange Act of 1934 to provide our stockholders with the opportunity to approve, on a non-binding, advisory basis, the compensation of our named executive officers. At the Company's 2020 annual meeting of shareholders, shareholders were asked to vote on a proposal seeking their views as to whether the say-on-pay vote should be held every year, every two years or every three years. A majority of shareholders voting on the matter indicated a preference for holding such vote on an annual basis. Accordingly, our board of directors decided, as previously disclosed, that the advisory vote on executive compensation will be held on an annual basis at least until the next non-binding shareholder vote on the frequency with which the advisory vote on executive compensation should be held.

Proposal and Background

At this annual meeting, we are asking our stockholders to approve, on a non-binding, advisory basis, the following resolution (commonly referred to as Say on Pay):

RESOLVED, that the stockholders of The New Home Company Inc. hereby approve the compensation of the Company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and accompanying narrative disclosures set forth in this proxy statement.

We are a 'smaller reporting company' and have elected to provide scaled compensation-related disclosures permitted as a 'smaller reporting company'. While we do not have a 'Compensation Discussion and Analysis' section in our proxy statement, we encourage stockholders to review the 'Executive Compensation' section of this proxy statement, including the summary compensation table and related narrative disclosure.

Our overall compensation program applicable to NEOs is intended to attract and retain qualified executives for the Company through fluctuating business cycles, provide them with incentives to achieve our strategic, operational and financial goals, increase shareholder value and reward long-term financial success.

Our executive compensation programs are designed to have the following attributes:

Effects of Advisory Vote

Because the vote on this proposal is advisory in nature, it will not affect any compensation already paid or awarded to our named executive officers and will not be binding on the Board or the Compensation Committee. However, the Board will consider the outcome of the vote when making future executive compensation decisions.

Board Recommendation

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE 'FOR'APPROVAL OF THE RESOLUTION SET FORTH ABOVE REGARDING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. UNLESS INSTRUCTED OTHERWISE ON YOUR PROXY CARD, THE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY WILL VOTE ALL PROXIES 'FOR' THE PROPOSAL.

Assuming the presence of a quorum at the Annual Meeting, under our Bylaws, the affirmative vote of a majority of the Shares present in person or by proxy and entitled to vote on the proposal is necessary for its approval. As a result, abstentions will be treated as votes against the proposal, whereas broker non votes will have no effect on the outcome of the vote.

COMPENSATION OF DIRECTORS

Non-Employee Director Compensation Philosophy and Program

Our Compensation Committee is responsible for the periodic review of compensation and benefits paid to non-employee directors, and the determination of the compensation of all non-employee directors is approved by our Board, following consultation with SBCG. We believe that compensation for non-employee directors should be competitive and should align the interests of our directors with our stockholders' interests through the payment of a portion of director compensation in RSUs.

Below is the non-employee director compensation program effective for 2020 (which was unchanged from 2019). Under this program, the non-employee directors were eligible to receive the following cash and equity compensation:

Each Board member who serves on the board and is re-elected as a director, or is a continuing director, is granted his or her annual RSU award on the date of such annual meeting (each an 'Annual Grant'). Each Annual Grant vests in full on the earlier of (i) the date of the next annual meeting of the Company's stockholders following the applicable grant date (it being understood that the Annual Grant shall vest on the date of such annual meeting whether or not the director is re-elected at such meeting, so long as the director serves through such meeting) and (ii) the first anniversary of the applicable grant date, subject in each case to continued service. During its February 2021 meetings, the Compensation Committee and Board adopted a new form of restricted stock unit agreement that shall be applicable to the directors' 2021 RSU grants pursuant to which the shares subject to the RSUs will be delivered on the 30th day following the date of the director's 'separation from service' with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code. This revision will effectively allow our directors to defer payment of taxes for (and receipt of) shares granted pursuant to such RSU agreement until the director leaves the Board.

We also reimburse our non-employee directors for reasonable out-of-pocket expenses incurred in connection with the performance of their duties as directors, including, without limitation, travel expenses in connection with their attendance in-person at Board and committee meetings. Directors who are employees do not receive any compensation for their services as directors.

Director Stock Ownership Guidelines

Under our stock ownership guidelines, each non-employee director must hold 100% of all shares received from the vesting, delivery or exercise of equity awards granted by us until the non-employee director beneficially owns shares of our common stock equal to three times the annual cash retainer, which, as of the current date, is $135,000 (the 'ownership threshold'). We use, (i) with respect to shares underlying equity awards granted to the director by us, the share price that was used to value the equity awards when granted or current market price, whichever is greater and (ii) with respect to shares otherwise acquired, the price at which such shares were acquired or current market price, whichever is greater, as applicable, to determine the number of shares required to meet the ownership threshold. In addition, the shares subject to the ownership threshold requirement are net of any shares of common stock that remain after payment, as and if applicable, of (i) the exercise price of stock options or purchase price of other awards and all applicable withholding taxes, including shares sold or netted with respect thereto, and (ii) all applicable transaction costs ('net shares'). Each non-employee director is expected to achieve his or her threshold ownership requirement within three years of joining the Board or the third anniversary of the date of an increase in the ownership threshold; provided that in the event of an increase in retainer which has the effect of increasing the ownership threshold, the director shall then be required to hold 100% of the net shares until such time as such increased ownership threshold is met and shall not be deemed to be out of compliance with this policy unless he or she sells net shares prior to reaching such increased ownership threshold. As of March 22, 2021, all of our directors met the ownership threshold utilizing the ownership definitions described above.

Non-Employee Director Compensation Table

The table below summarizes the compensation received by our non-employee directors for the year ended December 31, 2020. All of our non-employee directors were appointed to the Board effective upon the closing of our initial public offering.

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PROPOSAL 4

RATIFICATION OF SELECTION OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTANTS

The Audit Committee has appointed KPMG LLP ('KPMG') as our independent registered public accounting firm to audit our consolidated financial statements for our fiscal year ending December 31, 2021. KPMG was appointed in March 2020 and served as our independent registered public accounting firm to audit our consolidated financial statements for our fiscal year ended December 31, 2020 and also provided certain other audit-related services, as further discussed below under the heading 'Audit and Related Fees.' During fiscal 2019, Ernst & Young LLP ('EY') served as our independent registered public accounting firm to audit our consolidated financial statements for our fiscal year ended December 31, 2019 and also provided certain other audit-related services, as further discussed below under the heading 'Audit and Related Fees.' Representatives of KPMG are expected to attend (or be available by teleconference at) the 2021 Annual Meeting, be available to respond to appropriate questions and, if they desire, make a statement.

Stockholder ratification of the selection of KPMG as our independent registered public accountants is not required by our bylaws or otherwise. Although we are not required to do so, we are seeking stockholder ratification of KPMG's appointment as our independent registered public accounting firm. If KPMG's appointment is not ratified, the Audit Committee will reconsider whether to retain KPMG, but still may retain them. Even if the appointment of KPMG is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in our and our stockholders' best interests.

Board Recommendation

OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE 'FOR' THE RATIFICATION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2021. UNLESS YOU GIVE CONTRARY INSTRUCTIONS, THE SHARES REPRESENTED BY YOUR RETURNED EXECUTED PROXY WILL BE VOTED 'FOR' THE RATIFICATION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2021.

Assuming the presence of a quorum at the Annual Meeting, under our Bylaws, the affirmative vote of a majority of the Shares present in person or by proxy and entitled to vote on the proposal is necessary for its approval. As a result, abstentions will be treated as votes against the proposal.

AUDIT MATTERS

Audit and Related Fees

The following table provides information regarding the fees billed by KPMG for audit, audit-related and tax services to us during the fiscal year ended December 31, 2020 and fees billed by EY for audit, audit-related and tax services to us during the fiscal year ended December 31, 2019:

Audit Fees

These are fees for professional services performed by KPMG and EY in 2020 and 2019, respectively, for the audit of our annual financial statements, consents, comfort letters and services that are normally provided in connection with statutory and regulatory filings or engagements, including work performed in connection with the Company's securities offerings, registration statements and responding to comment letters from the SEC.

The audit fees for 2020 and 2019 included $80,000 and $0, respectively, for fees related to comfort letters, registration statements and other agreed upon procedures.

Audit-Related Fees

These are fees for and related to the audit of three and six of our unconsolidated joint ventures for each 2020 and 2019, respectively, which fees are paid for entirely by our unconsolidated joint ventures.

Tax Fees

These are fees for professional services performed by KPMG and EY in 2020 and 2019, respectively, with respect to tax compliance, tax advice and tax planning. This includes the preparation of our and our consolidated subsidiaries' original and amended tax returns and refund claims, payment planning, tax audit assistance and tax work stemming from 'Audit-Related' items. These fees also include fees for preparation of original and amended tax returns, payment planning and tax audit assistance for our unconsolidated joint ventures, which fees are paid for or reimbursed by our unconsolidated joint ventures. For 2020, $126,742 of the fees related to the Company's consolidated return and filings for wholly owned subsidiaries and $14,000 related to our unconsolidated joint ventures. For 2019, $110,624 of the fees related to consulting and the Company's consolidated return and filings for wholly owned subsidiaries and $64,664 related to our unconsolidated joint ventures.

All Other Fees

There were no fees for other permissible work performed by KPMG or EY that did not meet the above category descriptions.

Pre-Approval Policies and Procedures

Under its charter, our Audit Committee, or the Chair of our Audit Committee, must pre-approve all engagements of our independent registered public accounting firm. Our Audit Committee approved all audit and non-audit services in 2020 and 2019.

Change in Independent Registered Public Accountants

Dismissal of previous independent registered public accounting firm:

On March 18, 2020, the Audit Committee dismissed EY as the Company's independent registered public accounting firm.

The reports of EY on the Company's consolidated financial statements as of and for the fiscal year ended December 31, 2019 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

During the fiscal year ended December 31, 2019 and the subsequent period through March 18, 2020, (i) there were no 'disagreements' (as defined in Item 304(a)(1)(iv) of Regulation S-K) with EY on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, any of which disagreements, if not resolved to the satisfaction of EY, would have caused EY to make reference thereto in connection with its reports on the consolidated financial statements for such fiscal years; and (ii) there were no 'reportable events' (as defined in Item 304(a)(1)(v) of Regulation S-K).

Letter of Ernst & Young LLP:

The Company provided EY with a copy of the Current Report on Form 8-K (the 'Form 8-K') which was filed with the SEC on March 23, 2020 and requested that EY furnish the Company with a letter addressed to the SEC stating whether EY agreed with the disclosures contained in the Form 8-K or, if not, stating the respects in which it did not agree. The Company received the requested letter from EY and a copy of the letter, dated March 23, 2020, was filed as Exhibit 16.1 to the Form 8-K.

We provided the above disclosures under 'Dismissal of previous independent registered public accounting firm' and 'Letter of Ernst & Young LLP' to EY and confirmed EY is in agreement with the statements contained therein.

Engagement of new independent registered public accounting firm:

Effective March 21, 2020, the Audit Committee approved the engagement of KPMG to serve as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2020. The decision to change the Company's principal independent accountants was the result of a competitive bid proposal received by management and the Audit Committee as well as the Company's focus on streamlining its cost structure and reducing its general and administrative expenses. During the fiscal years ended December 31, 2019 and through the appointment of KPMG on March 21, 2020, neither the Company nor anyone on its behalf consulted with KPMG regarding:

We provided the above disclosure under 'Engagement of new independent registered accounting firm' to KPMG and confirmed KPMG is in agreement with the statements contained therein.

Annual Review of Auditor

At least annually, the Audit Committee reviews the Company's independent registered public accounting firm to decide whether to retain such firm on behalf of the Company. KPMG has been the Company's auditor since March of 2020. In undertaking its annual review, and in making its determination to engage a new independent registered public accounting firm, the Audit Committee engaged with both firms' partners and senior leadership. The Audit Committee considered several factors in determining whether to engage KPMG, including KPMG's professional qualifications and that of the proposed lead audit partner and other key engagement partners, KPMG's fees, KPMG's independence and independence policies, and KPMG's depth of understanding of the Company's business, industry, and accounting policies and practices (including its process to rotate the lead audit partner in accordance with Public Company Accounting Oversight Board ('PCAOB') standards).

Audit Committee Report

Following is the report of the Audit Committee with respect to The New Home Company's audited consolidated balance sheets as of December 31, 2020 and 2019, and the related consolidated statements of operations, equity and cash flows for each of the three years in the period ended December 31, 2020 and the notes thereto. The material in this report is not 'soliciting material,' is not deemed 'filed' with the SEC, and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934.

Responsibilities and Activities. The Audit Committee operates under a written charter adopted by the board of directors and currently has three members. Each member of the Audit Committee is 'independent,' as required by the applicable listing standards of NYSE and the rules of the SEC. Our Board has also determined that each Audit Committee member is 'financially literate' under the NYSE rules and that Ms. Lowe and Mr. Heeschen each qualifies as an audit committee financial expert, as defined by applicable SEC rules.

Management of the Company has responsibility for preparing the Company's financial statements, including the Company's internal control over financial reporting. KPMG LLP and Ernst & Young LLP, each of whom acted as independent registered public accountant for the Company for the fiscal years 2020 and 2019, respectively, were respectively responsible for performing an audit of the Company's annual consolidated financial statements in accordance with generally accepted accounting principles ('GAAP') and for issuing a report on those statements. KPMG LLP and Ernst & Young LLP also reviewed the Company's 2020 and 2019 interim financial statements, respectively, in accordance with applicable auditing standards. The Audit Committee is responsible for overseeing the integrity of the Company's financial statements and internal control structure on behalf of the Board of Directors. The Audit Committee met five times during 2020, including meetings regularly with its then current independent registered public accountant, both privately and with management present.

During these meetings and in carrying out its role, the Audit Committee, among other activities:

Members of the Audit Committee are not full-time employees of the Company and are not performing the functions of management or auditors or accountants. As such, it is not the duty or responsibility of the Audit Committee or its members to conduct 'field work' or other types of auditing or accounting reviews or procedures or to set auditor independence standards.

Members of the Audit Committee necessarily rely on the information provided to them by management and the independent accountants. Accordingly, the Audit Committee's considerations and discussions referred to above do not assure that the audit of the Company's financial statements has been carried out in accordance with GAAP or that the Company's auditors are in fact 'independent.'

Review with Management. The Audit Committee reviewed and discussed our audited financial statements (including the quality of our accounting principles) with management.

Review and Discussions with Independent Accountants. The Audit Committee reviewed and discussed our audited financial statements (including the quality of the Company's accounting principles) with KPMG LLP. The Audit Committee discussed with the then current independent registered public accountant the matters required to be discussed by applicable standards of the PCAOB. Further, the Audit Committee reviewed the Reports of Independent Registered Public Accounting Firm included in our Annual Report on Form 10-K related to its audit of the Company's consolidated financial statements. The Audit Committee also received and reviewed the written disclosures and the letter from each of its independent registered public accountants regarding the auditors' independence required by the applicable requirements of the PCAOB regarding the independent accountant's communications with the audit committee concerning independence, and discussed with such accountant its independence from the Company and our management.

Conclusion. Based on the review and discussions referred to above, the Audit Committee recommended to the Board that our audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC.

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

Cathey Lowe (Chairperson)

Sam Bakhshandehpour

Paul C. Heeschen

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

Related Person Transaction Policy

The Board has adopted a written Related Person Transaction Policy (the 'Policy'). The purpose of the Policy is to ensure that all transactions between related persons and us, including our subsidiaries, are properly identified, reported, reviewed and approved, and disclosed in accordance with applicable law. All related person transactions entered into or proposed to be entered into must be disclosed to and approved by the Audit Committee. In March 2019, the Board formed a Related Party Review Committee that has the power to substitute in for the Audit Committee for approval of related person transactions with IHP and/or Douglas C. Neff. The Audit Committee or Related Party Review Committee, as applicable, reviews related person transactions to: (i) determine whether the transaction is in the best interest of the Company, (ii) ensure a conflict of interest does not exist and/or that the transaction is being conducted at a fair and appropriate price, (iii) review the position within the Company or relationship of the related person with the Company, (iv) determine the materiality of the transaction to the related person and the Company, and (v) obtain any other information necessary to disclose such related person transaction. If the proposed transaction involves a related person who is a member of the Audit Committee, the transaction must be approved by a majority of the disinterested members of the Audit Committee. The Policy provides that the Audit Committee has authority to approve, in advance, categories of Related Person Transactions that need not be individually reported to, reviewed by, and/or approved by the Audit Committee but that will instead be reported to and reviewed by the Audit Committee collectively on a periodic basis. The Audit Committee has pre-approved the payment by the Company of refundable deposits to landowners in land purchase transactions even if such landowner is a 'related person' under the Policy; provided that the transaction is approved prior to the deposit becoming non-refundable. Our General Counsel is responsible for determining and disclosing all related person transactions to the Audit Committee of which she becomes aware and the Company utilizes annual questionnaires completed by directors and executive officers to aid in the identification of related person transactions.

The Audit Committee has excluded each of the following related person transactions under the Policy: (a) compensation to an executive officer or director if the compensation is required to be reported in the Company's proxy statement pursuant to Item 402 of Regulation S-K; (b) compensation to an executive officer if such compensation would have been required to be reported under Item 402 if the executive was a 'named executive officer' and such compensation has been approved by the Compensation Committee, or recommended by the Compensation Committee to the Board for approval; or (c) transactions that are in the Company's ordinary course of business and where the interest of the related person arises only: (i) from the related person's position solely as a director of another corporation or organization that is a party to the transaction; or (ii) from the direct or indirect ownership by such related person and all other related persons, in the aggregate, of less than a 10% equity interest in another person (other than a partnership) which is a party to the transaction; or (iii) from both such position described in (i) and such ownership described in (ii); or (iv) from the related person's position as a limited partner in a partnership in which the related person and all other related persons, in the aggregate, have an interest of less than 10%, and the related person is not a general partner of and does not have another position in the partnership. Exception (b) however, does not apply if the executive officer is also an immediate family member of an executive officer or director of the Company.

Under the Policy, a related person means (a) an executive officer or director of the Company, or a nominee for election as a director; (b) any person who is known to be the beneficial owner of more than 5% of our common stock, (c) any immediate family member of any of the foregoing persons, or (d) any entity in which the foregoing persons is employed as an executive officer or is a general partner, managing member or principal in a position of having control of significant influence or in which any of the foregoing persons has a 5% of greater beneficial ownership, or (e) any entity in which any director, executive officer, nominee or more than 5% beneficial owner is employed. A 'related person transaction' is a transaction or series of transactions in which we participate (whether or not we are a party) and in which a related person has a direct or indirect material interest. A transaction involving more than $120,000 is presumed to be a material transaction.

Transactions With Related Persons

Investor Rights and Registration Rights Agreements

On February 5, 2014, we entered into the Investor Rights Agreement. For more information on this agreement, see 'Proposal 1-Election of Directors-Board Structure and Nominees.' We have entered into a registration rights agreement with Messrs. Webb, Stelmar, Davis and Thomas Redwitz and IHP, TCN/TNHC LP, and Watt/TNHC LLC with respect to the shares of our common stock that they received as part of our formation transactions. We refer to these shares collectively as the 'registrable shares.' Pursuant to the registration rights agreement, we have granted the parties and their direct and indirect transferees shelf registration rights requiring us to file a shelf registration statement and to maintain the effectiveness of such registration statement so as to allow sales thereunder from time to time, and, in certain circumstances, the right to 'piggy-back' the registrable shares in registration statements we might file in connection with certain future public offerings. Our obligation to cause any registration statements filed pursuant to the registration rights agreement to be declared effective or remain effective is on a reasonable best efforts basis. Notwithstanding the foregoing, any registration is subject to cutback provisions, and we are permitted to suspend the use, from time to time, of the prospectus that is part of the registration statement (and therefore suspend sales under the registration statement) for certain periods, referred to as 'blackout periods.'

Joint Ventures and Land Purchases

We have entered into agreements with our unconsolidated joint ventures to provide management services related to the underlying projects. Pursuant to management agreements for each project, we receive a management fee or overhead allowance usually based on each project's revenues. During the years ended December 31, 2020 and 2019, we earned $0.9 million and $1.9 million, respectively, in management fees, of which, $36,000 and $0 was included in 'due from affiliates' in our consolidated balance sheets at December 31, 2020 and 2019, respectively. As of December 31, 2020 and 2019, the Company had investments in certain unconsolidated joint ventures totaling $0.1 million and $21.9 million, respectively, where our joint venture partner is an affiliate of a member of our Board or significant shareholder, as discussed below. We consider a joint venture to be 'active' if active homebuilding or land development activities are ongoing and the entity continues to own homebuilding lots or homes remaining to be sold. Joint ventures that are not 'active' are considered 'inactive' and generally only have warranty or limited close-out management and development obligations ongoing. As of the date of this filing, of our nine current joint ventures, none are 'active'.

David Berman, one of our former non-employee directors, is Executive Chairman of Tricon Capital Group Inc., an affiliate of TCN/TNHC LP ('Tricon'). Mr. Berman ceased to be a director in May 2018. Based solely on that certain Schedule 13G/A filed by Tricon on February 14, 2020, Tricon owns approximately 4.4% of our common stock as of such date and as such, we no longer consider them to be a 'related person' for fiscal year 2020 but provide information regarding Tricon for informational purposes and for the fiscal year 2019.

Various affiliates of Tricon have served as limited partners of our joint ventures, including TNHC-TCN Santa Clarita LP ('Villa Metro') and Calabasas Village LP ('Avanti') with Tricon holding 90%⁽¹⁾ and 90%⁽¹⁾ of the interest, respectively in such ventures. These ventures are considered 'inactive' and generally only have warranty activities ongoing. Tricon was previously the 95%⁽¹⁾ owner of our Arantine Hills Holdings LP ('Bedford') joint venture, but in the 2020 third quarter, the Company sold its interest in the Bedford joint venture to Tricon (the 'Buyout'). Pursuant to the agreement, the purchase price was $5.1 million for the sale of the Company's partnership interest. During the year ended December 31, 2020, the Company recorded a $2.3 million other-than-temporary impairment charge to its investment in the Bedford joint venture reflecting the sale of its joint venture investment for less than its current carrying value. The sale agreement, among other things, allowed for a continuation of the Company's option to purchase at market up to 30% of the remaining lots from the joint venture. Prior to the Buyout, in the 2019 third quarter, the Bedford joint venture partners entered an agreement that increased the Company's funding obligation by $2.8 million over the then existing contribution cap.

Tricon's equity as of December 31, 2020 and 2019 for the Villa Metro project was $0 and $0.2 million, respectively, and no management fees were paid to Tricon during the years ended December 31, 2020 and 2019. Our equity in Villa Metro as of December 31, 2020 and 2019 was $0 and $0.1 million, respectively, and no management fees for Villa Metro were paid to us during the years ended December 31, 2020 and 2019. Tricon's equity and management fees as of and for the years ended December 31, 2020 and 2019 for the Avanti project were $0.2 million and $35,000, respectively, and $10.3 million and $0.1 million, respectively. Our equity and management fees in Avanti as of and for the years ended December 31, 2020 and 2019 was $25,000 and $0.1 million, respectively, and $1.1 million and $0.2 million, respectively. Tricon's equity and management fees as of and for the year-to-date period ended July 31, 2020 (immediately prior to the effectiveness of the Buyout) and the year ended December 31, 2019 for the Bedford project were $134.7 million and $0.9 million, respectively, and $125.7 million and $1.1 million, respectively. Our equity and management fees in the Bedford venture as of and for the year-to-date period ended July 31, 2020 (immediately prior to the effectiveness of the Buyout) and as of and for the year ended December 31, 2019 was $7.1 million and $0.1 million, respectively, and $6.6 million and $0.4 million, respectively.

In the first quarter 2018, the Company entered into an option agreement to purchase lots in phased takedowns with its Bedford joint venture. The gross purchase price of the land was $10.0 million with profit participation and master marketing fees due to seller as outlined in the contract. During the 2019 third quarter, the Company entered into an amendment to this agreement to reduce the gross purchase price of the land to $9.3 million. The Company took down 46% of the lots underlying this contract during the year ended December 31, 2019. At December 31, 2019, the Company had taken down all contracted lots and the Company's $1.5 million nonrefundable deposit made as consideration for this option had been fully applied to the purchase price with no deposit remaining. At December 31, 2020, the Company has paid $0.2 million in master marketing fees related to this project. During the fourth quarter 2018, the Company entered into a second option agreement with the Bedford joint venture to purchase lots in phased takedowns. The Company made a $1.4 million nonrefundable deposit as consideration for the option, and a portion of the deposit was applied to the purchase price across the phases. The gross purchase price of the land was $10.5 million with profit participation and master marketing fees due to the seller pursuant to the agreement. The Company took down approximately 8% and 92% of the lots underlying this agreement during the years ended December 31, 2020 and 2019, respectively. At December 31, 2020, all lots were taken down and the Company had paid $0.3 million in master marketing fees, and at December 31, 2020 and 2019, no deposit remained outstanding.

Douglas C. Neff, one of our non-employee directors, is President of IHP Capital Partners, the general partner of the manager of IHP. IHP owns approximately 13.6% of our common stock.

An affiliate of IHP has a 63%⁽¹⁾ interest in TNHC Meridian Investors LLC, which in turn has a 32%⁽¹⁾ interest in our joint venture TNHC Newport LLC. Under the terms of the TNHC Meridian Investors LLC joint venture agreement, after the return of certain preference amounts, capital contributions and cost overruns/profit shortfalls to the joint venture partners, we are entitled to receive distributions from the joint venture equal to our economic interest. As of December 31, 2020 and 2019, our equity in TNHC Meridian Investors LLC was $0.1 million and $0.3 million, respectively. IHP's equity as of December 31, 2020 and 2019 for the TNHC Meridian Investors LLC joint venture was $0.3 million

and $0.5 million, respectively. No management fees were paid from TNHC Meridian Investors LLC to IHP during the years ended December 31, 2020 and 2019. No management fees were paid to the Company during the years ended December 31, 2020 and 2019 from TNHC Meridian Investors. This venture is considered 'inactive' with only warranty activities ongoing.

An affiliate of IHP currently has a 50% interest in TNHC Russell Ranch LLC ('Russell Ranch'), one of our other joint ventures, in which our equity as of December 31, 2020 and 2019 was approximately $0 and $11.5 million, respectively. Prior to the Russell Lot Sale (discussed below), IHP's contribution percentage of the Russell Ranch joint venture was 65%⁽¹⁾. IHP's equity as of December 31, 2020 and 2019 for the Russell Ranch joint venture was $0 and $45.9 million, respectively. The Russell Ranch joint venture paid $0 in management fees to IHP during the years ended December 31, 2020 and 2019. TNHC Russell Ranch LLC paid the Company management fees of $0 for the years ended December 31, 2020 and 2019.

Under the terms of the original Russell Ranch joint venture agreement, after the return of capital contributions and preferred return, profits are shared 50%/50%. Similarly, the agreement provided for losses, including for this purpose accrued preferred return, to be shared 50%/50%. During the 2019 second quarter, each party to the Russell Ranch joint venture had reached its maximum capital contribution and the Company entered into an amendment pursuant to which the parties agreed to fund additional required capital in the aggregate amount of approximately $26 million for certain remaining backbone improvements for the Project (the 'Phase 1 Backbone Improvements') 50% by IHP and 50% by the Company ('Amendment Additional Capital'). Such Amendment Additional Capital was to be returned to IHP and the Company ahead of any other contributed capital; provided that none of the Amendment Additional Capital accrued a preferred return that base capital contributions were generally afforded under the joint venture agreement. During 2020, the Company made the strategic decision to exit the Russell Ranch joint venture project due to the low expected financial returns relative to future capital requirements and related risks and undertook the process of marketing for sale the underlying developable lots of the joint venture. This exit was effectively accomplished through the joint venture's sale of Phases 2 and 3, its remaining developable lots, to a third-party purchaser during the 2020 fourth quarter that resulted in the Company recording income of $4.5 million to equity in income (loss) of unconsolidated joint ventures, partially offsetting a $20.0 million other-than-temporary impairment recorded by the Company during the 2020 second quarter (the 'Russell Lot Sale'). The Company received a distribution of $2.0 million immediately following the closing of the Russell Lot Sale. The members agreed upon and distributed proceeds from the sale to the members less a reserve amount which is maintained by the joint venture to address close out matters, such as warranty, contingent liabilities, remaining Phase 1 infrastructure improvements, and common amenity operations until turnover to homeowners' association. Due to the joint venture's close out status, the members confirmed that no further preferred return would accrue or be payable and future distributions would be made 50% to IHP and 50% to TNHC pursuant to a third amendment to the venture's operating agreement.

The Company has also purchased land from entities affiliated with Mr. Neff and IHP. In 2017, the Company entered into an agreement with an IHP affiliate to purchase lots in a Northern California masterplan community for a total purchase price of $16.1 million in a phased takedown structure with customary profit participation and master marketing fees due to seller. As of December 31, 2019, the Company had taken down all of the lots under this contract and paid $0.4 million in master marketing fees. As of December 31, 2019, IHP was also no longer affiliated with this development.

Also in 2017, the Company entered into agreements with IHP affiliates to purchase finished lots in Northern California with customary profit participation structured as an optioned takedown. At execution, the total purchase price, including the cost for the finished lot development and the option, was expected to be approximately $56.3 million, dependent on the timing of takedowns, as well as our obligation to pay certain fees and costs during the option maintenance period. During 2019, an unrelated third party entered into agreements to purchase from the IHP affiliate some of the lots under the Company's option. The Company has in turn entered into an arrangement pursuant to which it shall purchase such lots on a rolling take down basis from such unrelated third party. The unrelated third party purchased 67% of the lots originally under contract with the IHP affiliate. Following this purchase of the lots by the unrelated third party in 2019, the Company has no remaining lots to purchase from the IHP affiliate. As of December 31, 2020, the Company (i) had no nonrefundable deposits with the IHP affiliate to be applied to the Company's takedown of lots from the unrelated third party and (ii) has paid (A) $0.2 million for fees and costs, (B) $3.0 million in option payments, and (C) $18.0 million for the purchase of lots directly from the IHP affiliate.

During 2018, the Company agreed to purchase land in a master-plan community in Arizona for an estimated purchase price of $3.8 million plus profit participation and marketing fees pursuant to contract terms. As of December 31, 2019, IHP was no longer affiliated with this development. The Company began taking down these lots during 2020 whereby it took down approximately 38% of total contracted lots. As of December 31, 2020 and 2019, the Company had an outstanding, nonrefundable deposit of $0.2 million and $0.3 million, respectively, related to this contract. As of December 31, 2020, the Company has paid $22,000 in master marketing fees.

_________________

Other Related Person Transactions

On February 14, 2019, the Company entered into a consulting agreement and separation agreement with Thomas Redwitz, in connection with Mr. Redwitz's resignation as Chief Investment Officer effective March 1, 2019. Pursuant to his separation agreement and general release of claims, Mr. Redwitz received a cash severance payment of $1.1 million as well as company-paid continued healthcare

coverage for no more than twelve months following March 1, 2019. He also forfeited unvested equity awards. In addition, the Company entered into a consulting agreement pursuant to which Mr. Redwitz serves as a consultant to the Company for an initial one-year term commencing on the Effective Date, subject to mutual continuation by agreement of Mr. Redwitz and the Company. Under the original consulting agreement, Mr. Redwitz received the following benefits: (i) a monthly consulting fee of $10,000, (ii) each outstanding vested Company stock option held by Mr. Redwitz as of the Effective Date (each, a 'Pre-Consulting Stock Option') will remain outstanding and exercisable in accordance with its terms (based on Mr. Redwitz's continued provision of consulting services thereafter rather than continued employment) and (iii) reimbursement for reasonable business expenses incurred in connection with the provision of consulting services in accordance with Company policy. During 2020, the Company and Mr. Redwitz agreed to continue the consulting agreement on a month to month basis and the consulting fee was reduced to $5,000 per month beginning in April of 2020. If the consulting agreement and Mr. Redwitz's consulting services are terminated by either party for any reason (other than by the Company for cause), including due to the Company's decision not to renew the agreement, then each remaining Pre-Consulting Stock Option will remain exercisable for three months following the termination date (but in no event beyond the maximum term of the option). Each of the separation agreement and the consulting agreement also requires Mr. Redwitz's continued compliance with restrictive covenants and the Company's continued compliance with indemnification and insurance obligations each included in Mr. Redwitz's employment agreement.

In connection with his retirement on February 17, 2017, the Company entered into a consulting agreement with Mr. Stelmar, a current Board member and our former Chief Investment Officer, pursuant to which Mr. Stelmar served as a consultant to the Company. The contract expired in August 2019 and was not extended. For his consulting services, Mr. Stelmar was compensated $0 and $48,000 for the years ended December 31, 2020 and 2019, respectively. The agreement provided for continued vesting of his unvested Company equity awards on the basis of his continued provision of consulting services. Accordingly, Mr. Stelmar's outstanding restricted stock unit equity award granted in 2016 continued to vest in accordance with its original terms, based on his continued provision of consulting services rather than continued employment, and fully vested during 2019. Mr. Stelmar also received Company-subsidized benefits coverage for himself and his eligible dependents. In connection with his continuing board service as a non-employee board member, as of the date of his retirement, Mr. Stelmar is compensated for such board service pursuant to and in accordance with the Company's Non-Employee Director Compensation Program described under 'Compensation of Directors-Non-Employee Director Compensation Philosophy and Program.' At December 31, 2020 and 2019, no fees were due to Mr. Stelmar for his consulting services.

John Neff, the son of Douglas C. Neff, was employed by the Company as a Director of Land Acquisition. He terminated his employment as of March 6, 2020. For the year 2020 through his termination date, John Neff was compensated with approximately $63,000, including base salary and bonus. 428 RSUs were forfeited upon John Neff's termination of employment. During the year ended December 31, 2019, the Company compensated John Neff with approximately $163,000, including base salary and bonus. In addition, John Neff participated in the Company's general welfare plans, including health benefits, retirement savings opportunities and limited other employee benefits.

Joan Marcus Webb (formerly Joan Marcus-Colvin) is currently a part-time employee of the Company and was previously our Chief Marketing Officer, who reports to our President and Chief Executive Officer, Leonard Miller. Ms. Webb is married to H. Lawrence Webb. During the year ended December 31, 2020, the Company compensated Ms. Webb with approximately $369,000 in cash, including base salary and bonus, and $81,686 of RSUs which vest ratably over three years with vesting subject to continued service. During the year ended December 31, 2019, the Company compensated Ms. Webb with approximately $340,000 in cash, including base salary and bonus, $36,000 of RSUs which vest ratably over three years with vesting subject to continued service, and $40,000 in NQSOs which vest and become exercisable ratably over three years subject to Ms. Webb's continued service. We provide information regarding the assumptions used to calculate the value of all equity awards in Note 13, Stock-Based Compensation, to our consolidated audited financial statements included in our Form 10-K filed with the SEC on February 11, 2021. In addition, Ms. Webb has participated in the Company's general welfare plans, including health benefits, retirement savings opportunities and limited other employee benefits.

In June 2015, the Company entered into an agreement that effectively transitioned Joseph Davis' role within the Company from that of Chief Investment Officer to that of a non-employee consultant to the Company. For his consulting services, Mr. Davis was compensated $12,000 and $36,000 for the years ended December 31, 2020 and 2019, respectively. On June 26, 2019 his contract was amended to extend its term one year and reduce his scope of services and compensation to $1,000 per month. He also received Company-subsidized benefits coverage until June 26, 2019. At December 31, 2020, no fees were due to Mr. Davis for his consulting services. Additionally, the Company entered into a construction agreement effective September 7, 2017, with The Joseph and Terri Davis Family Trust Dated August 25, 1999 ('Davis Family Trust') of which Joseph Davis is a trustee. The agreement was a fee building contract pursuant to which the Company acted in the capacity of a general contractor to build a single family detached home on land owned by the Davis Family Trust. Construction of the home was completed during the 2019 first quarter. For its services, the Company received a contractor's fee of 3% of the cost of the

construction work and improvements to be completed as outlined in the contract and the Davis Family Trust reimbursed the Company's field overhead costs. During the years ended December 31, 2020 and 2019, the Company billed the Davis Family Trust $0 and $0.5 million, respectively, including reimbursable construction costs and the Company's contractor's fees which are included in fee building revenues in our consolidated statements of operations. Contractor's fees comprised $0 and $15,000 of the total billings for the years ended December 31, 2020 and 2019, respectively. The Company recorded $0 and $0.5 million for the years ended December 31, 2020 and 2019, respectively, for the cost of this fee building revenue which is included in fee building cost of sales in our consolidated statements of operations. At December 31, 2020 and 2019, the Company was due $0 from the Davis Family Trust for construction draws.

Based on that certain Schedule 13G filed on February 8, 2021, FMR LLC beneficially owns 8.7% of our common stock as of December 31, 2020. An affiliate of FMR LLC ('Fidelity') provides investment management and record keeping services to the Company's 401(k) Plan. The amounts the Company and its participants compensated Fidelity has part of these services did not exceed $120,000 for either of the years ended December 31, 2020 or 2019.

OTHER MATTERS

Delinquent Section 16(a) Reports

Based solely on our review of the copies of such forms furnished to us and the written representations from certain of the reporting persons that no other reports were required, we believe that none of our executive officers, directors and greater than ten percent beneficial owners during the fiscal year ended December 31, 2020 were delinquent in complying with the filing requirements of Section 16(a).

Stockholder Proposals and Nominations

Proposals Pursuant to Rule 14a-8. Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present proper proposals for inclusion in the proxy statement and for consideration at our next Annual Meeting of stockholders. To be eligible for inclusion in the 2022 proxy statement, your proposal must be received by us nolater than December 6, 2021 and must otherwise comply with Rule 14a-8. While our Board will consider stockholder proposals, we reserve the right to omit from the proxy statement stockholder proposals that we are not required to include under the Exchange Act, including Rule 14a-8.

Proposals and Nominations Pursuant to Our Bylaws. Under our bylaws, in order to nominate a director or bring any other business before the stockholders at the 2022 Annual Meeting that will not be included in our proxy statement, you must notify us in writing and such notice must be received by us prior to the close of business at the principal executive offices of the Company, The New Home Company Inc., c/o Principal Executive Office/Secretary, 6730 N Scottsdale Rd., Suite 290, Scottsdale, Arizona 85253 no earlier than December 6, 2021and no later than January 5, 2022, unless our 2022 Annual Meeting is more than 30 days before or after the anniversary of our 2021 Annual Meeting, in which case the notice must be delivered not more than 120 days before, and no later than the 90th day prior to the 2022 Annual Meeting or, the 10th day following the day on which public disclosure of the date of the 2022 Annual Meeting was first made. For proposals not made in accordance with Rule 14a-8, you must comply with specific procedures set forth in our bylaws and the nomination or proposal must contain the specific information required by our bylaws. You may write to our Secretary at 6730 N Scottsdale Rd., Suite 290, Scottsdale, Arizona 85253 to deliver the notices discussed above and to request a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates pursuant to our bylaws.

Householding of Proxy Materials

The SEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as 'householding,' potentially means extra convenience for stockholders and cost savings for companies.

In accordance with the rules and regulations adopted by the SEC, we have elected to provide access to our proxy materials to our stockholders via the internet. Accordingly, a notice of internet availability of proxy materials has been mailed to our stockholders. Stockholders have the ability to access the proxy materials at www.proxyvote.com, or request that a printed set of the proxy materials be sent to them, by following the instructions set forth on the Notice mailed to them. Some banks, brokers and other nominee record holders may be participating in the practice of 'householding' proxy materials. This means that only one copy of our proxy materials or the Notice, as applicable, may have been sent to multiple stockholders in the same house. We will promptly deliver a separate Notice and, if requested, a separate proxy statement and annual report, to each stockholder that makes a request using the procedure set forth on the Notice. Stockholders who currently receive multiple copies of proxy materials at their address and would like to request householding of their communications, or would like additional copies of materials, may contact the Householding Department of Broadridge Financial Solutions, Inc. at 51 Mercedes Way, Edgewood, New York 11717, or at 1-800-579-1639, or at [email protected].

Where You Can Find More Information

The Company files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission under the Exchange Act. We make available free of charge on or through our Internet website, in the 'Investors' section of our website at https://www.NWHM.com., our reports and other information filed with or furnished to the SEC and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC's Internet website, www.sec.gov, also contains reports, proxy statements and other information about issuers, like us, who file electronically with the SEC.

WE WILL PROVIDE, WITHOUT CHARGE, ON THE WRITTEN REQUEST OF ANY STOCKHOLDER, A COPY OF OUR 2020 ANNUAL REPORT ON FORM 10-K, WITHOUT EXHIBITS, INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES REQUIRED TO BE FILED WITH THE SEC PURSUANT TO RULE 13a-1. STOCKHOLDERS SHOULD DIRECT SUCH REQUESTS TO THE COMPANY'S SECRETARY AT 15231 LAGUNA CANYON ROAD, SUITE 250, IRVINE, CALIFORNIA 92618, OR BY EMAIL AT [email protected].

Incorporation by Reference

Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Exchange Act, which might incorporate future filings made by us under those statutes, the Audit Committee Report will not be incorporated by reference into any of those prior filings, nor will any such report be incorporated by reference into any future filings made by us under those statutes. In addition, references to our website in this proxy statement are not intended to function as hyperlinks and information on our website, other than our proxy statement, Annual Report, notice and form of proxy, is not part of the proxy soliciting material and is not incorporated herein by reference.

This proxy statement contains 'forward-looking statements' (as defined in the Private Securities Litigation Reform Act of 1995). These statements are based on our current expectations and involve risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding actions to be taken by us. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements should be evaluated together with the many uncertainties that affect our business, particularly those mentioned in the risk factors in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 and accompanies this proxy statement and in our subsequent periodic reports on Form 10-Q and our current reports on Form 8-K.

Other Business

As of the date of this proxy statement, our Board knows of no other business that will be presented for consideration at the Annual Meeting. If other proper matters are presented at the Annual Meeting, however, it is the intention of the proxy holders named in the Company's form of proxy to vote the proxies held by them in accordance with their best judgment.

Appendix A

THE NEW HOME COMPANY INC.

SECOND AMENDED AND RESTATED 2016 INCENTIVE AWARD PLAN

The Plan's purpose is to enhance the Company's ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing these individuals with equity ownership opportunities. The Plan amends and restates in its entirety The New Home Company Inc. Amended and Restated 2016 Incentive Award Plan (the 'Prior Plan'). Capitalized terms used in the Plan are defined in Section 11.

Service Providers are eligible to be granted Awards under the Plan, subject to the limitations described herein.

Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any portion of an Award that constitutes 'nonqualified deferred compensation,' the transaction or event constituting the Change in Control with respect to such Award (or portion thereof) must also constitute a 'change in control event' (as defined in Treasury Regulation §1.409A-3(i)(5)) to trigger the payment event for such Award, to the extent required by Section 409A.

THE NEW HOME COMPANY INC.

2021 Proxy Card

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