8-KLeadership ChangesMaterial Agreements

HORTON D R INC /DE/ 8-K Report, Material Agreement (Dec 11, 2007)

Filed December 11, 2007For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) filed an 8-K on December 11, 2007, primarily detailing amendments to its executive compensation plans for the 2008 fiscal year. The company's Compensation Committee approved a restatement of the 2000 Incentive Bonus Plan and adopted a new 2008 Performance Unit Plan. These changes aim to align executive compensation with long-term company performance and ensure tax deductibility under Section 162(m) of the Internal Revenue Code. Key adjustments include modifications to maximum award limits, the introduction of performance-based criteria tied to "Adjusted Pre-Tax Income," operating cash flow, and SG&A containment for the 2008 fiscal year. The plans will be submitted for shareholder approval at the 2008 Annual Meeting. Additionally, the filing provides details on the base salaries and performance bonus structures for key executives, including Chairman Donald R. Horton and CEO Donald J. Tomnitz, for the 2008 fiscal year, along with a review of the 2007 fiscal year bonuses paid.

Key Highlights

  • 1Amendment and restatement of the 2000 Incentive Bonus Plan to modify maximum award limits, now including a combination of a performance-based formula and a fixed dollar amount (up to $8 million).
  • 2Adoption of the 2008 Performance Unit Plan, allowing for grants of units tied to the Company's stock price, with maximum payouts of two times the target number of units.
  • 3Establishment of the 2008 fiscal year compensation program for Chairman Donald R. Horton and CEO Donald J. Tomnitz, with unchanged base salaries and new performance-based bonus criteria.
  • 42008 performance-based bonus criteria for top executives include adjusted pre-tax income, operating cash flow, and SG&A containment.
  • 5The 2000 Restated Plan defines "Adjusted Pre-Tax Income" by excluding inventory impairments, land option cost write-offs, and goodwill impairments.
  • 6Both the 2000 Restated Plan and the 2008 Performance Unit Plan require shareholder approval at the 2008 Annual Meeting of Stockholders.
  • 7Details provided on 2007 fiscal year incentive compensation paid to Mr. Horton and Mr. Tomnitz, totaling $1,586,087 each due to performance in the first two quarters.

Frequently Asked Questions

The primary changes involve the amendment and restatement of the 2000 Incentive Bonus Plan and the adoption of a new 2008 Performance Unit Plan. These updates adjust how executive bonuses are calculated, setting new maximum award limits and incorporating a broader set of performance metrics such as adjusted pre-tax income, operating cash flow, and SG&A containment, all aimed at aligning executive pay with company performance and tax deductibility.

"Adjusted Pre-Tax Income" is defined as consolidated income before income taxes, specifically excluding amounts related to inventory impairments, land option cost write-offs, and goodwill impairments, as reported in the company's public financial statements.

Yes, both the amended 2000 Incentive Bonus Plan and the new 2008 Performance Unit Plan are scheduled to be submitted to the Company's stockholders for approval at the 2008 Annual Meeting of Stockholders on January 31, 2008.

For the 2007 fiscal year, Chairman Donald R. Horton and CEO Donald J. Tomnitz each received a total performance-based bonus of $1,586,087. This amount was paid out based on the consolidated pre-tax income achieved in the first two quarters of the fiscal year, as no pre-tax income was recorded in the third and fourth quarters.