HFA Board Resource Guide

Board Resource Guide Supporting Governance, Stewardship, & Employee Ownership

Employee Owned.

People Powered.

Guide Overview

Welcome + Orientation

04

Company Overview

08

Governance Framework

24

Board Structure

34

2 | Employee Owned. People Powered.

Employee Ownership & ESOP Governance

38

Enterprise Financial Performance + Metrics

50

Board Effectiveness

52

Reference Materials

54

3

01

Welcome + Orientation Purpose of the Board

05

Welcome Letter

06

How to Use this Booklet

07

4 | Employee Owned. People Powered.

Purpose HFA’s Board of Directors plays an important role in helping guide the long-term health, accountability, and strategic direction of the enterprise. The Board provides oversight, perspective, and governance support to help ensure HFA continues to operate with integrity, strengthen its employee-owned culture, and make decisions that support sustainable growth.

This booklet is intended to provide directors and director candidates with a clear starting point for understanding HFA’s governance structure, business context, ownership model, and key reference materials.

5

Welcome We are thrilled to welcome you to the journey towards our infinite vision. Your unique knowledge and experience will be instrumental in helping the Board of Directors lead the companies of the enterprise to navigate current and forecast future challenges and opportunities while protecting the share value for our employee owners and building an enterprise that is strong enough and healthy enough to last for many generations to come.

Our infinite vision is to THRIVE. An infinite vision has no time limit, no finish line, no boundaries, and no real metric to gauge progress. An infinite vision is something to get behind, something to believe in and then being obsessed with advancing the cause.

THRIVING is grounded in our credo: Employee Owned. People Powered. We are an enterprise where every individual doesn’t just work for the company: they own it. An employee owner’s mindset is different than thinking just as an employee. It’s a mindset that transforms employees into stakeholders, where every decision matters because the stakes are high.

For the enterprise to THRIVE, our people must first THRIVE, which comes directly from our culture code – aspiring to be a people-first culture of empowerment where talent THRIVES. Merriam-Webster defines the verb “thrive” as: to grow vigorously. To THRIVE is not a feeling, but an engagement -- a deep emotional commitment to vigorous growth, personally and professionally.

Personally, it’s about expanding character, discipline, self-awareness, resilience, and capacity to lead ourselves well. Professionally, it’s about sharpening skills, growing impact, deepening expertise, and strengthening in the way we serve our team, client-partners, and enterprise.

Vigorously means doing something with active strength, intense effort, or robust energy. Vigor is an active and committed part of growing. It is the work we put into growth. It is a commitment to growth with passion, pride and fulfillment.

THRIVING is always People-first. When our people THRIVE, the enterprise THRIVES.

Sincerely,

Dave Wilgus

Ryan Ray

Chief Executive Officer

Chief Operating Officer + Board Chair

6 | Employee Owned. People Powered.

How to Use this Booklet This booklet is designed to serve as a digital orientation guide, reference tool, and central hub for your service on the HFA Enterprise Board. As a Director, you will receive login credentials to our online Board management portal, Nasdaq Boardvantage. This portal will contain a lot of the same information in this booklet, however, this booklet is meant to be a quick resource guide with lesser detail.

As you move through the booklet, you will find context on HFA’s enterprise structure, employee ownership model, governance framework, Board roles and responsibilities, financial performance materials, and key reference documents. Each section is intended to support a clear understanding of HFA’s leadership, strategy, operations, and employee ownership responsibilities.

Because this booklet is digital, it also provides direct access to the official documents and resources that support Board service. Throughout the booklet, links may be provided to governance documents, financial materials, meeting records, policies, committee materials, ESOP resources, and other source documents.

When more detailed review is needed, those linked materials can serve as the complete and current reference.

As a digital resource, this booklet can help you:

+ Become familiar with HFA’s purpose, culture, enterprise structure, and areas of service. + Understand the Board’s purpose, mission, governance expectations, and role in supporting long-term value creation.

+ Reference Board composition, committee structure, role descriptions, and related governance materials.

+ Review HFA’s ESOP structure and the Board’s connection to employee ownership governance. + Access financial performance summaries, valuation materials, KPIs, and supporting reports. + Locate official reference materials, including bylaws, ESOP documents, meeting minutes, risk management information, and insurance policies.

The goal is to create one clear, reliable place for Board-related information while making it easy to access the official documents behind that information. Together, the booklet and linked resources help establish a shared foundation for informed discussion, effective governance, and continued stewardship of HFA’s employee-owned enterprise.

7

02

Company Overview

8 | Employee Owned. People Powered.

Culture Code

10

Enterprise Overview

12

Corporate Structure + Entity Overview

20

HFA Progressions 1990 - 2025

22

9

Company Overview

Culture Code

“HFA aspires to be a people-first culture of empowerment where talent thrives.”

As we worked to develop our purpose and values statement, we recognized that we wanted a statement that was internally focused on our people and our cultural aspirations. As Dharmesh Shah, founder of HubSpot, says, “Whether you like it or not, you’re going to have a culture. Why not make it one you love?” We are passionate about making our culture one of engagement and empowerment that people are inspired to participate and contribute.

Thus, we developed our Culture Code statement to declare our commitment to our people, to define expectations of our leadership, and to hold ourselves accountable to the future: 1. Our people come first.

2. We empower everyone around us.

3. Developing the talent of our people is critical.

4. We help everyone thrive.

We use the word “aspires” explicitly, so everyone is seeking to be something great together and we’re all headed in the same direction toward an ambitious destination.

10 | Employee Owned. People Powered.

11

Company Overview

who we are Our Vision

Our Purpose

Our Culture

Amplify our Solution Suite to client-partners through securing vital talent and harnessing advancing technologies.

Leading clients to fulfill their vision while building lasting partnerships.

HFA aspires to be a people-first culture of empowerment where talent thrives.

12 | Employee Owned. People Powered.

shared values Our Principles That Shape Everything We Do Lead with Excellence Work Together Exceed Expectations Build Relationships Do What’s Right

Employee Owned.

People Powered.

As owners, we are personally invested in the outcomes, striving to exceed expectations and deliver lasting value.

13

Company Overview

Hospitality

Industrial

Healthc

Crafting inviting spaces that blend hospitality & functionality

Engineering robust, efficient spaces to optimize production & innovation

Dynamic spaces patient well-bein & medical functio

+ Restaurants

+ Integrated Automation

+ Hospitals

+ Entertainment

+ Fulfillment

+ Clinics

+ Resorts

+ Cold Storage

+ Ambulatory C

14 | Employee Owned. People Powered.

care

s that prioritize ng, technology, onality

Care

Retail Captivating spaces that merge aesthetics & functionality for engaging shopping journeys

Science + Technology

+ Grocery

Spaces designed for discovery and innovation, integrating labs, offices, and manufacturing to support research and collaboration.

+ Automotive Services

+ Life Sciences

+ National Retailers

+ Climate Tech + Medical Research 15

Company Overview

single-source studio Bring your whole design team together.

At HFA, we unite the expertise of our multi-discipline team of architects, engineers, permitters, and other industry professionals, so you can: + Maximize coordination across disciplines + Streamline communications and gather feedback earlier + Create higher quality documents that can be delivered sooner

16 | Employee Owned. People Powered.

fully integrated disciplines Architecture

Civil Engineering

Landscape Architecture

Mechanical Engineering

Interior Architecture

Structural Engineering

Permitting

Plumbing Engineering

Refrigeration

Electrical Engineering

Fueling Design

Fire Protection Engineering

17

Company Overview

18 | Employee Owned. People Powered.

HFA Employee Map We have over 600 professionals working coast to coast, and licensure across all 50 states, so we can collaborate no matter where we are based.

19

Company Overview

Corporate Structure + Entity Overview

ESOP Trustee

+ Great Bank T + Mason Eisenb

HFA Enterpr

+ No Employee + 7 Person boa + 2 Indepe + Committees + Finance + Compen + Nominat + Plan Adm

ESOP Trustee

HFA Enterprises, ltd

the ESOP

+ Culture a

committe

Enformed Co

ECS, llc HFA, pllc C-Prism, llc

+ Formed in 20 + General Cont construction

C-Prism, llc

HFA-AE, ltd HFA Mexico HFA Intl, llc

20 | Employee Owned. People Powered.

+ Currently no e + Originally cre Clients

e

Trust Company

berg

HFA-AE, ltd + Operating company for AE design services + Majority of HFA Enterprises, LTD employees, including all administrative services, reside here

rises, ltd

es currently reside at this level

ard maximum currently

endent Directors required

+ Risk Committee (will be Audit in 2027)

nsation Committee

tion Committee

ministrative Committee (administration of P)

and Communication Committee (subee of the Plan Administrative Committee)

+ Owns 99% of Harrison French & Associates Mexico

HFA International, llc

+ No employees currently reside at this company + Owns 1% of Harrison French & Associates Mexico

HFA Mexico + Currently no work performed on projects located in Mexico

+ All employees are fully integrated into US operations + ESOP Mirror benefit plan created for employees in Mexico

onstruction Services, llc

019

tractor; does not self perform any

employees reside at this company

eated to develop software solutions for

Harrison French & Associates, pllc + Not under the HFA Enterprises, LTD organization + Separately owned by Dave Wilgus, Ryan Ray, Bo Ebbrecht, Greg Schluterman and James Owens

+ Created due to licensing issues in specific states due to ownership of the ESOP of HFA Enterprises, LTD.

21

35 Growth, Trust, & Transformation Years of

Highlights

1990–1997:

Foundation + Early Trust

+ Harrison French

HFA begins as an architecture firm and builds early relationships that shape decades of growth

+ Early project base -

1998–2004:

Highlights

+ Harrison French,

Architecture is founded

+ Beginning of a major

Residential & Office Bldgs

long-term retail relationship

+ Second local office

Expanding Services + Infrastructure

+ New HFA Headquarters

HFA expands its physical footprint and service capabilities.

+ Integration of A+E Services

2005–2013:

Highlights

+ Harrison French &

Leadership Depth + National Retail

+ Walmart Supplier

Associates, LTD.

of the Year

+ Bentonville Campus

HFA scales its leadership, technical capabilities, and national retail delivery.

+ Corporate Retail Rollout

Opens

Highlights

2014–2019:

National Expansion + Leadership Transition HFA matures into a broader enterprise with expanded reach, ownership, and leadership.

2020–2025: Enterprise Transformation + Employee Ownership HFA enters a period of vigorous growth and diversification.

Employee Growth

Founder/CEO

+ Campus LEED-CI Gold + 25-year milestone + 7,000+ Projects + 11 LEED AP + Licensed in 50 States

+ HFA Mexico + HFA Enterprises, LTD + HFA International, PLLC + Fort Worth Office + Allevato acquisition

+ + + +

Sec

Highlights

+ 250 working virtually

+ HFA-AE, LTD

+

+ Vision ‘23 release

+ Employee-owned

+

+ Vision ‘26 release

+ Intranet

+ Together Conference

+ CDG & TRIA acquisition

1

5

17

25

37

48

71

78

1990

1995

1997

2000

2002

2004

2005

2007

Explore the Timeline -

HFA Progressions

Clients

Leadership

+ Walmart

+ Harrison French, CEO

+ Sam’s Club

Services

+ Mechanical + Electrical + Plumbing + Interior Design + Landscape Architecture Services

Clients

Leadership

+ Civil

+ Love’s

+ Larry Lott, President/COO

+ Fire Protection

+ Chris Horton, EVP/CFO

+ Structural Services

Clients

Leadership

+ Refrigeration + Commissioning

+ Chick-fil-A + Valvoline

+ Dave Wilgus, CEO + Ryan Ray, COO

ctors

Services

Clients

Leadership

S+T

+ Kitchen Design

+ Michelle Page, CPO

Healthcare

+ Power Systems

+ Wawa + Parker’s Kitchen + Sam’s Club DC + Darden Hospitality + Wonder Hospitality

7 New Associates ESC is founded Walmart Logistics Prototype Dev./KOP

7

+ Reality Capture/ Modeling

+ Nick Wille, CFO + Cannon McNair, CSO

106

188

157

215

225

235

219

296

555

2009

2012

2015

2016

2017

2019

2021

2023

2025

03

Governance Framework

Board Guidelines

25

Director Role Description

30

24 | Employee Owned. People Powered.

Board Guidelines Introduction This Board Charter defines the roles, responsibilities, and operational procedures for the Board of Directors (the “Board”) of HFA Enterprises, LTD, a 100% Employee Stock Ownership Plan (ESOP) company, and is meant to work in alignment with the Roles and Responsibilities for Directors and Advisors documents. As stewards of the ESOP, the Board plays a key role in monitoring company operations and performance, ensuring compliance with the ESOP, and fostering the long-term success and sustainability of the business while protecting the interests of employee-owners.

Purpose and Mission of the Board The purpose of the Board is to mentor company leadership, advise company leadership and monitor the performance of the company in a way that creates long-term value for the employee-owners, guides corporate strategy, ensures effective risk management, and ensures compliance with all relevant legal, ethical, and financial obligations, particularly those pertaining to the ESOP structure.

The Board’s mission includes:

+ Promoting the long-term financial health and sustainability of the company. + Overseeing the implementation of the ESOP and ensuring that it benefits employees as owners. + Establishing sound corporate governance practices. + Supporting the company’s Vision, Purpose, Code and Share Values. + Ensuring transparency and effective communication with employee-owners.

25

Governance Framework

Board Structure and Composition The Board shall consist of a maximum of 7 directors, including internal and independent directors with relevant industry and governance experience. The Board shall, in normal course, have a minimum of (3) internal directors and a minimum of two (2) independent directors to ensure objectivity in decision-making and corporate oversight. The Chair should consult with the CEO to determine optimal Board composition to support strategic growth and risk management.

Key Composition Requirements:

+ Internal Directors: These should be selected from among the employees, representing the interests of employee-owners. It is recommended that the Internal Directors should consist of the CEO and (2) other key leaders.

+ Independent Directors: These individuals should not have any material relationship with the company or its management and will provide independent oversight. These individuals should provide relevant expertise to the Board in support of Vision and strategies.

+ Chairperson: The Board shall select a Chairperson, who is responsible for leading Board meetings and ensuring effective board governance. If the Board does not select a Chairperson, then the CEO will preside over Board meetings.

+ Committees: The Board shall establish committees, including a Finance and Risk Committee, Compensation Committee, Nominating/Governance Committee, and Plans Administrative Committee, to address specific areas of oversight. An Independent Director shall chair the Finance and Risk Committee, Compensation Committee, and Nominating/Governance Committee.

Roles and Responsibilities of the Board The Board has several critical roles and responsibilities, including but not limited to (see HFA Enterprise Director Role Description for more detail):

Corporate Governance and Oversight:

+ Establish governance practices in line with legal requirements and ESOP-specific regulations. + Ensure that the ESOP is administered properly and in the best interests of the employees.

26 | Employee Owned. People Powered.

+ Interview and Elect Officers of the companies of the Enterprise. + Regularly evaluate the performance of the CEO and executive leadership. Set compensation for Officers, or delegate to the CEO.

+ Assess Board performance and Board composition.

Strategic Direction:

+ Evaluate, consult and approve long-term corporate strategies and business plan, including financial objectives, significant capital allocations and expenditures, assessing assumptions and judging the feasibility of achieving the plans.

+ Monitor the company’s performance in achieving strategic objectives.

Financial Oversight:

+ Review and approve the company’s annual budget, financial statements, and major financial transactions.

+ Oversee the company’s financial health and ensure the solvency of the ESOP. ESOP Management and Employee Ownership:

+ Ensure that the ESOP is aligned with the company’s long-term goals and is well-managed. + Protect the value of employee-owners’ stock by overseeing proper valuation and fiduciary responsibilities of the ESOP trustee.

Risk Management:

+ Oversee risk management practices, ensuring that the company identifies and mitigates key business, financial, and operational risks.

Compliance:

+ Ensure compliance with all applicable local, state, and federal laws and regulations, including ESOPspecific laws such as ERISA and DOL guidelines.

+ Approve policies related to ethical business practices and legal compliance.

27

Governance Framework

Board Meetings and Procedures The Board shall meet regularly, at least quarterly, to discuss the performance, strategy, and operations of the company. Special meetings may be called as needed. The following guidelines apply to Board meetings:

+ Frequency of Meetings: Quarterly meetings and additional special meetings as needed. + Agenda: The Chairperson shall work with the CEO and the Board to set the meeting agenda, which will be distributed to Board members in advance.

+ Quorum: A quorum for Board meetings shall consist of a majority of elected directors. + Minutes and Documentation: Accurate minutes of Board meetings will be taken and distributed to all directors promptly following each meeting.

Evaluation of Board Performance The Board will evaluate its own performance annually, as well as the performance of individual directors, to ensure it is fulfilling its duties effectively. The evaluation process will include:

+ Self-assessments of the Board’s overall effectiveness. + Assessment of Board members’ contribution and expertise. + Review of governance practices to ensure that they remain relevant and effective.

Director Responsibilities + Act in the best interests of the company and its employee-owners. + Disclose any conflicts of interest and recuse themselves from decisions where they have a potential conflict.

+ Prepare for meetings by reviewing materials in advance and actively participating in discussions. + Uphold confidentiality with respect to sensitive company information. + Continually gain knowledge of the industries HFA operates, ESOP governance, and other topics that support the growth of the company.

28 | Employee Owned. People Powered.

ESOP Fiduciary Duty The Board has a fiduciary duty to the employee-owners of the ESOP. This includes acting prudently and in good faith, with the best interests of the employees in mind. Specific ESOP-related fiduciary responsibilities include:

+ Overseeing the proper administration of the ESOP. + Ensuring that employee-owners receive timely and accurate information regarding their ESOP holdings.

+ Ensuring that the ESOP is in compliance with applicable laws and regulations.

Succession Planning The Board shall regularly review the company’s leadership and succession planning processes, particularly regarding the CEO and key leadership roles, to ensure continuity of leadership and the company’s longterm success.

Amendments to the Charter This Board Charter may be amended or modified by the Board as necessary. Any amendments must be approved by a majority vote of the Board members.

Conclusion This Charter outlines the key governance responsibilities and processes for the Board of Directors of an ESOP company. The Board commits to upholding the highest standards of corporate governance, transparency, and accountability to ensure the long-term success of the company and the benefits of employee-owners.

29

Governance Framework

Director Role Description Directors serve as fiduciaries, entrusted with overseeing the Company’s operations, strategy, and compliance while acting in the best interests of shareholders and stakeholders alike. This role description outlines the responsibilities, qualifications, and expectations for Directors, ensuring they maintain the highest standards of integrity, accountability, and leadership. Directors are expected to contribute their expertise and judgment to guide the Company’s long-term success while upholding best governance practices. Through active participation and continuous learning, directors help foster a culture of ethical decision-making, financial stability, and sustainable growth.

Accountability A director is responsible to the Company as a whole, acting as a fiduciary. This includes representing the collective interests of the Company’s shareholders and other stakeholders. Directors must maintain the confidentiality of all nonpublic Company information and will be required to sign confidentiality agreements prior to their appointment.

Corporate Governance and Oversight Directors are responsible for overseeing key areas, including:

+ The Company’s ethical culture. + Business strategy. + The “repurchase obligation” (RO) tied to the ESOP, phantom stock, stock appreciation rights, and other equity instruments.

+ Financial performance and reporting. + Risk management, including cybersecurity. + Regulatory compliance. + Executive talent management, focusing on CEO performance, compensation, and succession.

30 | Employee Owned. People Powered.

+ Recruitment and onboarding of directors. + Director performance and education.

Board Responsibilities As fiduciaries and in conjunction with responsibilities outlined in the HFA Enterprise Board charter, Directors perform the following duties aligned with best governance practices:

+ Approve (or, if necessary, develop or revise) the corporate Purpose statement and ensure it is upheld. + Interview, Elect and Evaluate Officers of the Enterprise, unless specifically delegated to the CEO. + Set Compensation for the Officers of the Enterprise, unless specifically delegated to the CEO. + Evaluate, consult and approve long-term corporate strategies and business plan, including financial objectives, significant capital allocations and expenditures, assessing assumptions and judging the feasibility of achieving the plans.

+ Monitor corporate performance against business plans. + Ensure an adequate corporate compliance and ethics system is in place. + Approve the Company’s major financial statements. + Approve material transactions outside the ordinary course of business (e.g., mergers and acquisitions). + Serve on board committees as assigned.

Essential Functions Certain critical decisions are reserved for the full board alone and cannot be delegated. These include:

+ Amendments to governing documents. + Approval of plans for mergers or consolidation. + Sale, lease, or exchange of substantial Company assets. + Corporate dissolution.

31

Governance Framework

Board or committee-level responsibilities include:

+ Declaration of dividends. + Compensation for directors and the CEO. + Issuance and redemption of Company stock and equity instruments. + Approving standards for indemnifying officers, directors, and employees. + Filling board vacancies until the next annual meeting. + Approving director nominees for shareholder appointment. + Reduction of the Company’s legal capital.

Qualifications State law requires directors to be “natural persons” over 18. Beyond legal requirements, the Company seeks directors with:

+ Integrity and accountability. + Informed judgment. + Financial literacy. + Confidence and leadership. + High performance standards.

Required Education and Experience Directors should have the education and experience necessary for success in their respective fields, with recognized achievements in those areas.

Continuing Education The Company encourages continuous learning. Directors are expected to enhance their knowledge of the Company, industry, and governance roles through:

+ Preparation for and participation in board meetings. + Company-provided educational sessions on director and officer liability, current industry issues, and governance trends.

32 | Employee Owned. People Powered.

Competencies Directors are selected based on the Board’s Skills Matrix, ensuring a diverse range of competencies.

Nominees are chosen based on their alignment with the Company’s needs.

Performance Expectations + Attend all meetings. + Prepare by reviewing provided materials and conducting necessary research. + Actively participate in discussions, offering relevant information and opinions. + Maintain confidentiality of all Board deliberations and Company information.

Time Commitment The Board meets at least four times per year in person, with committee meetings typically scheduled alongside. Directors should expect to work 25-30 hours per quarter, including meeting preparation, discussions with management, and attending Company events. Committee chairs may need to commit additional hours.

Compensation, Evaluation, and Tenure Directors receive compensation in the form of:

+ Annual retainers, payable in cash. + Additional retainers for serving as committee chairs or members of multiple committees.

Board and director performance are evaluated biannually. Directors should be committed to continuous improvement, and opportunities for development will be addressed as needed. Directors serve oneyear terms, with no guarantee of re-nomination. The Board’s composition is subject to change based on company strategy, governance needs, or other factors.

33

04

Board Structure

Committee Structure & Charters

35

Board Composition

36

34 | Employee Owned. People Powered.

Committee Structure + Charters Each Board committee operates under a formal charter that outlines its purpose, membership, authority, and responsibilities. These charters provide additional detail on how each committee supports the Board’s oversight role and helps carry out specific governance responsibilities.

Compensation Committee Charter The Compensation Committee assists the Board in overseeing compensation and benefits for the Chief Executive Officer and other senior executive employees of HFA Enterprises, LTD and its affiliates. The charter outlines the committee’s role in reviewing compensation philosophy, executive performance, annual compensation, benefit considerations, and related recommendations to the Board.

View Charter

Finance + Risk Committee Charter The Finance + Risk Committee assists the Board in fulfilling its oversight responsibilities related to financial reporting, internal controls, legal and regulatory compliance, external accountants, and enterprise risk management. The charter outlines the committee’s role in reviewing financial statements, key processes, accounting matters, compliance updates, risk management policies, and related recommendations to the Board.

View Charter

Nominating Committee Charter The Nominating Committee supports the Board in matters related to Board composition, director nominations, Board leadership, and governance continuity. The charter outlines the committee’s role in identifying and recommending Board candidates, recommending a Board Chair candidate, overseeing Board member evaluation, considering director independence and potential conflicts of interest, and recommending candidates for certain enterprise leadership and affiliate or subsidiary board roles.

View Charter

35

Board Structure

Board Composition The Board may utilize advisors to provide expertise, perspective, and insight that strengthen Board discussions and decision-making. Advisors serve as resources to the Board, offering recommendations, analysis, and informed viewpoints from their areas of experience or responsibility. While advisors do not possess Board authority or voting rights, they help directors better understand risks, opportunities, tradeoffs, and strategic implications that support effective governance and long-term stewardship of the company.

+ Internal Advisors – HFA currently has (2) Vice Presidents that serve as subject

Ryan

Internal Dire ryan.ray@h

matter advisors to the Board, providing expertise, operational insight, and functional perspective from within the organization to help directors better understand business conditions, emerging issues, risks, opportunities, and strategic implications. In addition, this position is used as part of the Board’s succession planning for Internal Directors.

+ Emeritus Advisor – Founder, Harrison French, serves as trusted advisor to the Board, providing historical perspective, institutional knowledge, industry relationships, and lessons learned that help directors evaluate long-term implications, preserve organizational continuity, and make informed decisions

Chris H

Internal D chris.horton@e

+ CFO, CPO, CSO – Our Chief Financial Officer, Chief People Officer, and Chief Strategy Officer serve as a management advisors to the Board, providing perspective from their area of responsibility, highlighting key risks and opportunities, and offering recommendations that enhance Board discussions and decisions.

+ Special Advisors – From time to time, the Board will engage specialized advisors, providing expertise, experience, or perspective in specific areas of importance to

Howard

help directors evaluate complex issues, explore alternatives, and make informed

Independe

decisions.

36 | Employee Owned. People Powered.

hkaplan@kapla

n Ray

ector (Chair) hfa-ae.com

Horton

Director ecs.construction

Compensation Committee + Howard Kaplan (Chair) + Jim Nevada + Larry Lott

Dave Wilgus Internal Director dave.wilgus@hfa-ae.com

+ Jim Nevada (Chair) + Howard Kaplan + Larry Lott

Nominating Committee + Howard Kaplan (Chair)

Larry Lott Internal Director larry.lott@hfa-ae.com

+ Chris Horton + Dave Wilgus

PAC Committee + Michelle Page (Chair) + Nick Wille + Chris Horton + Ryan Ray

d Kaplan

Jim Nevada

ent Director

Independent Director

anfiduciary.com

Finance + Risk Committee

jim.nevada@jimnevada.com

37

05

Employee Ownership & ESOP Governance

38 | Employee Owned. People Powered.

ESOP Governance Overview

40

Key Governance Roles - ESOP Company

41

Board Member Responsibilities

44

Ownership Culture

45

Annual Governance Calendar

46

Indemnification

47

Insurance Coverage

48

ESOP Repurchase & Sustainability

48

Note

49 39

Employee Ownership

ESOP Governance Overview As an employee-owned company, HFA’s governance structure is designed to support longterm stability, accountability, and shared success. Governance is shared among the Board of Directors, the ESOP Trustee, company leadership, and employee-owners.

Each group plays a distinct role in protecting the company, supporting employee ownership, and creating long-term value.

Key Governance Roles Are represented

by Trustee

ESOP T Elects

ESOP Participants

Board of D ESOP eligibility needs are met

Employees

40 | Employee Owned. People Powered.

Hire & Oversee

Management

The ESOP Company Board Handbook A practical, up-to-date guide for board members in ESOP companies that discusses crucial issues and best practices.

Suggested Reading

in an ESOP Company

Trustee

Establishes

Selects

Directors Appoint, Hire, & Oversee

Committees + Audit/Financial + Compensation + Governance + Plan Committees + Other Engages

Officers

+ Counsel/Advisors

41

Employee Ownership

Governance Roles ESOP Trustee The ESOP Trustee serves as the legal shareholder of the ESOP shares and votes those shares on key matters. The Trustee also acts as a fiduciary under ERISA, meaning they are responsible for acting in the best interest of ESOP participants.

Key responsibilities include:

+ Serving as the fiduciary for the ESOP + Appointing members of the Board of Directors + Approving the annual stock valuation + Reviewing and approving certain transactions involving company stock + Voting ESOP shares on significant corporate matters Open communication and mutual understanding between the Board and Trustee are essential to aligned, effective governance.

Employee-Owners Employee-owners are the ultimate beneficiaries of the ESOP. While employees typically do not vote their shares directly, they participate in the company’s long-term success through their ESOP accounts.

Once eligibility requirements are met, employees become participants in the ESOP and receive allocations of company stock over time, generally based on compensation and tenure.

Employee-owners contribute to the strength of the ESOP by engaging in the workplace, supporting company goals, and living HFA’s ownership culture

42 | Employee Owned. People Powered.

Board of Directors The Board of Directors provides oversight for the company’s strategy, leadership, performance, and longterm direction.

Key responsibilities include:

+ Overseeing corporate strategy + Hiring, evaluating, and compensating the CEO + Approving major decisions and capital expenditures + Monitoring financial performance and risk + Ensuring fiduciary oversight and legal compliance + Supporting strong governance practices

Officers and Management Company leadership is responsible for running the business day to day and aligning execution with the strategic direction set by the Board.

Key responsibilities include:

+ Executing the company’s strategy + Maintaining strong operations + Communicating with the ESOP Trustee + Supporting employee education around ownership + Building and reinforcing HFA’s ownership culture

43

Employee Ownership

Board Member Responsibilities As a Board member of an ESOP-owned company, your role includes providing thoughtful oversight, asking informed questions, and supporting decisions that protect the long-term health of the company and its employee-owners.

Board responsibilities include:

+ Hire, evaluate, and compensate the CEO + Approve strategic plans and major capital expenditures + Monitor financial performance and risk + Promote transparency and ownership culture + Ensure regulatory compliance + Avoid, disclose, or mitigate conflicts of interest Regular Meeting Attendance

Preparation and Review

Make every effort to regularly attend board meetings and related meetings.

Stays informed about board and corporate matters, prepares well for meetings, and reviews and comments on minutes and reports.

Commitment to Board Work

Relationship Building

Makes a serious commitment to participate actively in board work.

Gets to know other board members and builds a collegial working relationship that contributes to consensus.

Assignments and Deadlines

Evaluation and Promotion

Volunteers for and willingly accepts assignments and completes them thoroughly and on time.

Actively participates in the board’s annual evaluation and planning, shares company values, and promotes business opportunities.

44 | Employee Owned. People Powered.

Commitment to Ownership Culture Ownership culture is central to HFA’s identity. It is built through education, transparency, participation, leadership, celebration, and storytelling.

Below are the key steps to cultivate ownership culture:

1

2

3

4

5

6

Employee Education Provide ongoing education about how the ESOP works, including stock allocation, valuation, and repurchase obligations.

Transparent Communication Share regular updates on company performance, financial results, and strategic goals.

Recognition and Participation Involve employees in goal-setting, problem-solving, and recognizing achievements tied to ownership values.

Leadership Development Empower managers to model ownership behavior and support team engagement.

Celebrate Milestones Acknowledge ESOP anniversaries, stock value growth, and retirements to reinforce ownership impact.

Visual Reinforcement Use signage, dashboards, and storytelling to highlight employee ownership and success stories across the organization.

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Employee Ownership

Annual Governance Calendar Quarter

Governance Activities

Q1

+ Recurring Board and committee reports + Officer compensation + Regulatory and compliance

Q2

+ Recurring Board and committee reports + Company performance review + KPI/KRI dashboard review

Q3

+ Recurring Board and committee reports + Regulatory and compliance review + Annual stock value + ESOP liability and repurchase review

+ Dividend/distribution consideration + Long-term goals and strategies + KPI/KRI dashboard review

+ Recurring Board and committee reports + Board, officer, chairperson, subsidiary,

+ Annual budget and forecast + Annual business plan review + Risk tolerance decisions + KPI/KRI dashboard review

Q4

and committee appointments

+ Board, chairperson, and officer performance evaluations

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+ Officer performance goals + Annual valuation projections + KPI/KRI dashboard review

Understanding Indemnification Indemnification is an important protection for directors, particularly in an ESOP-owned company where governance and fiduciary responsibilities carry meaningful legal obligations.

In general, indemnification is the company’s formal commitment to protect a director from personal financial loss if they are sued or face legal expenses as a result of performing their duties in good faith.

This may include costs related to:

+ Legal defense + Judgements + Settlements These protections generally apply when a director acted in the best interest of the company and did not engage in misconduct, fraud, or actions for personal gain.

For ESOP companies, indemnification is especially important because directors may face liability related to oversight of the ESOP, including decisions around appointing or monitoring trustees, approving transactions involving company stock, or amending the plan.

However, indemnification is not absolute. It is typically governed by the company’s bylaws, articles of incorporation, indemnification agreements, and applicable law. It may also be limited if the company is unable or unwilling to indemnify.

That is why indemnification should be reviewed alongside Directors and Officers Liability Insurance and ERISA Fiduciary Liability Insurance. These policies help provide a financial backstop when indemnification is unavailable or insufficient.

Board members should confirm that HFA maintains a written indemnification policy or agreement that clearly outlines:

+ Scope of coverage + What is and is not covered + How legal costs are advanced + How indemnification works with insurance coverage Understanding these protections helps directors serve with clarity and confidence.

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Employee Ownership

Understanding Insurance Coverage HFA maintains executive risk coverage to help protect the company, its directors, officers, and other covered parties in connection with certain governance, fiduciary, employment practices, and crime-related claims.

HFA’s current Asset Protection Policy is issued through Mt. Hawley Insurance Company for HFA Enterprises, LTD. The policy period runs from October 24, 2025, to April 20, 2027. The policy includes purchased coverage for Management and Company Liability, Employment Practices and Third Party Discrimination Liability, Fiduciary Liability, and Crime Protection.

The full policy is included in this packet for reference. Board members should review the policy to understand applicable limits, retentions, exclusions, endorsements, reporting requirements, and the circumstances under which coverage may apply.

Board members should also be aware that the liability coverage sections are written on a claims-made basis, meaning coverage generally applies to claims first made during the policy period and reported according to the policy requirements.

Questions about coverage, claims, or interpretation of the policy should be directed to HFA leadership, legal counsel, or the company’s insurance advisor.

Understanding ESOP Repurchase and Sustainability A key responsibility in ESOP governance is understanding the company’s repurchase obligation.

Because ESOP shares are not publicly traded, the company is responsible for providing liquidity when participants retire, leave the company, become disabled, or pass away. This means the company must buy back shares from eligible ESOP participants according to the terms of the plan.

Repurchase obligation is both a financial planning issue and a governance issue. If it is not managed carefully, it can create pressure on cash flow and limit the company’s ability to reinvest in the business. At the same time, overfunding can restrict capital that could otherwise support growth.

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Common ways to manage repurchase obligations include:

Recycle

+ Repurchased shares are contributed back to the ESOP and reallocated to active participants.

Redeem and Reissue

+

The company redeems shares and issues new shares to the ESOP, which may dilute ownership.

Redeem and Retire

+

Shares are permanently retired, reducing future ownership unless replaced.

Installment Payments

+ Payments are spread over five years or more, easing short-term cash flow while extending the obligation.

Pre-Funding or Sinking Funds

+ The company sets aside cash reserves to help meet future obligations.

Boards should ensure repurchase obligations are regularly modeled, reviewed, and incorporated into financial planning. A formal repurchase obligation policy can help align ownership goals, financial sustainability, and long-term company health.

As a director, your oversight role includes helping ensure this obligation is managed in a way that supports both participant benefit and the long-term success of HFA. Note: This guide is intended to provide a high-level overview of ESOP governance and Board responsibilities. It should be reviewed alongside HFA’s governing documents, ESOP plan documents, legal agreements, and applicable guidance from company advisors.

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06

Enterprise Financial Performance + Metrics

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Valuation Executive Summaries

2022

2023

2024

The valuation executive summaries provide a year-by-year view of HFA’s enterprise value and the factors influencing that value over time. These summaries are included to help directors understand valuation trends, key business drivers, and the relationship between enterprise performance and employee ownership value. Because valuation is an important part of HFA’s ESOP structure, these materials should be treated as a reference point for understanding both financial performance and longterm employee-owner value creation.

PowerBI Dashboard Operational Financial Insights Report

Operational Financial Insights Report This dashboard provides Board members with a high-level view of key operational and financial indicators, offering additional context around company performance, trends, and areas of focus.

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07

Board Effectiveness

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Board Assessment Summary After completion of the Board assessments with each Director, a compiled assessment was completed averaging how the Directors scored as a total group. The top 10 and bottom 10 scores are listed below, and the complete compiled results are attached.

This information will be used as Leadership completes the list of skills needed on the Board for the Nomination and Governance Committee. Leadership is working with the Nomination Committee to develop an HFA Enterprise Board Director Application outlining expertise needed at the board to align with the future Vision of the Company.

The top 10 areas the Directors scored were: + Ethics & Integrity – 4.01

+ Organization Development – 3.46

+ Leadership Experience – 3.80

+ Compensation & Human Capital – 3.42

+ Teamwork – 3.54

+ Employee Ownership/ ESOP Culture – 3.41

+ Independence (per governance best practices) – 3.54 + Governance Knowledge – 3.41 + Problem-solving – 3.50

+ Board Governance & Oversight – 3.40

The bottom 10 areas the Directors scored were: + Technology/ Digital Transformation - 2.76

+ Networking – 3.04

+ Mergers & Acquisitions (M&A) – 2.85

+ Market Trends & Competitive Landscape – 3.06

+ Regulatory & Legal Expertise – 2.89

+ Corporate Finance / Capital Allocation – 3.07

+ Geographic Representation - 2.92

+ Global Perspective – 3.10

+ ESG/ Sustainability - 2.96

+ Business Development / Growth Strategy - 3.10

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08

Reference Materials

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Reference Materials Board members should use this section as a resource library for official documents related to HFA’s corporate governance, ESOP structure, enterprise risk management, insurance coverage, and other Board-related responsibilities.

1

D&O Insurance Policy

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