First American Financial Corp

This advisory 'Say on Pay' proposal asks shareholders to approve, on a non-binding basis, the Company’s executive compensation disclosures and programs for the named executive officers as presented in the proxy materials. Management and the Compensation Committee are seeking shareholder affirmation of the overall pay program to validate their continued approach of a pay-for-performance mix that shifts a substantial portion of compensation toward at-risk incentives and equity. The Compensation Committee cites strong 2025 financial results and significant achievement against incentive metrics (142% payout on AIP and LTI PRSU payouts at 137% for the 2023 performance period) as evidence that compensation was aligned with performance. The vote is advisory and non-binding, but the Committee will review the voting outcome and consider it in future compensation design and engagement. The context includes continued stockholder outreach, a recent leadership transition, and use of multi-year performance awards (rTSR PRSUs and time-vesting RSUs) intended to balance short- and long-term incentives. Management emphasizes rigorous target setting, use of two financial metrics (pretax margin and return on equity) for annual incentives, and the Committee’s discretion to adjust payouts for extraordinary items or strategic initiatives. A shareholder approval would be interpreted by management as endorsement of current pay practices and support for continuity in incentive structures; significant dissent could prompt reconsideration of plan design or increased engagement. The Board recommends FOR the proposal because it believes the compensation structure aligns executives’ interests with long-term stockholder value, is supported by prior shareholder votes, and produced measurable performance outcomes in 2025.

This management proposal seeks shareholder approval to amend the Certificate of Incorporation to eliminate three defined supermajority voting requirements (currently set at 66 2/3%) and replace them with a majority of outstanding shares requirement for specified actions: removal of directors outside the annual meeting process, amendments to specified Certificate provisions, and amendments to the Bylaws. Management advances this change as responsive to the prior year’s shareholder advisory outcome and ongoing engagement, arguing that majority voting better aligns governance with current market practice and shareholder expectations while preserving the Board’s ability to consider fiduciary duties in implementation. The proposal would lower entrenched voting thresholds, thereby making it procedurally easier for stockholders to effect certain governance changes in the future; however, the Board retains discretion not to implement the amendments even if approved, in the event it deems implementation inconsistent with its fiduciary duties. The recommended change is framed as improving corporate governance alignment with the investor community following a non-binding stockholder request in 2025, and the Board emphasizes continuity by making conforming Bylaws changes contingent on stockholder approval. From a governance analysis perspective, reducing supermajority barriers can increase accountability and responsiveness to majority shareholder views but also reduces protections against abrupt changes driven by short-term coalitions; management’s retained implementation discretion and continued public disclosure provide a modicum of procedural safeguards. The filing includes the precise proposed amendment language in Appendix B, enabling shareholders to evaluate the legal effect. Approval requires a 66 2/3% affirmative vote under the existing Certificate provision; therefore, even if a majority of votes cast supports the change, the amendment may fail unless the supermajority threshold is met. The Board recommends FOR the amendment because it believes this change reflects stockholder sentiment and aligns the Company’s governance with prevailing market norms while allowing the Board to exercise judgment on timing and implementation.

This proposal asks shareholders to approve amendments that will declassify the Board over a three-year phased schedule (directors in Class II first subject to annual election in 2027, Class III in 2028, and Class I in 2029), resulting in annual director elections beginning in 2029. Management frames the change as a response to investor preferences for annual elections to increase director accountability and to align the Company’s governance with current market practices; however, the Board chose a phased approach to preserve continuity and institutional knowledge during the transition. The amendments also adjust removal provisions: prior to full declassification directors remain removable only for cause, but following completion of declassification directors may be removed with or without cause (consistent with Delaware law), and the vote required to remove directors is reduced to a majority. The Board emphasizes that the amendments will not shorten existing director terms and provides transitional rules for filling newly created seats and vacancies to maintain orderly governance. From a governance risk/benefit perspective, declassification increases shareholder oversight and responsiveness but reduces defensive protections against rapid board turnover; the three-year phase-in mitigates disruption risk by staggering the change. The proposal requires a 66 2/3% affirmative vote under the existing Certificate; even if a majority of votes cast support the amendment, the supermajority threshold may present a practical hurdle. The Board recommends FOR the proposal because it believes declassification enhances alignment with investor expectations while the phased implementation preserves board stability and continuity during the transition.