8-KLeadership ChangesExhibits & Filings

HORTON D R INC /DE/ 8-K Report, Executive Changes (Nov 26, 2008)

Filed November 26, 2008For Securities:DHI

Summary

This 8-K filing from D.R. Horton, Inc. (DHI) on November 26, 2008, details executive and director compensation decisions made by the Compensation Committee and Board of Directors. A key point for investors is the compensation awarded to Chairman Donald R. Horton and President & CEO Donald J. Tomnitz for the 2008 fiscal year. While they had the potential for substantial bonuses based on pre-tax income, cash flow, and SG&A containment, actual payouts were significantly reduced, reflecting the challenging conditions in the homebuilding industry. The company also outlines the 2009 compensation programs for these key executives and other named officers, as well as compensation for non-management directors, noting that director fees remained unchanged.

Key Highlights

  • 1For fiscal year 2008, Chairman Donald R. Horton and President & CEO Donald J. Tomnitz each received a $848,482 bonus related to first-quarter adjusted pre-tax income. No further bonuses were paid for pre-tax income due to the lack of positive results in subsequent quarters.
  • 2Despite achieving performance targets for cash flow and SG&A containment, which could have yielded an $8 million bonus each for Mr. Horton and Mr. Tomnitz under their 2008 bonus programs, the Compensation Committee exercised discretion to reduce this bonus to $1 million each, citing the company's consolidated financial results and industry difficulties.
  • 3The Compensation Committee established and approved the 2009 fiscal year compensation programs for Donald R. Horton and Donald J. Tomnitz, including base salaries and performance-based bonus criteria.
  • 4Discretionary bonuses for fiscal year 2008 were approved for other named executive officers: Bill W. Wheat (EVP and CFO) and Stacey H. Dwyer (EVP and Treasurer) each received $350,000.
  • 5The company also established the 2009 fiscal year compensation programs for Bill W. Wheat and Stacey H. Dwyer.
  • 6Non-management director fees, committee member fees, and committee chairperson fees for the current fiscal year were approved, with no change from the prior fiscal year's rates.
  • 7Key compensation details for executives and directors are referenced through incorporated exhibits (10.1, 10.2, 10.3) and a form of Performance Unit Plan Award (Exhibit 10.4).

Frequently Asked Questions

Executive compensation for the 2008 fiscal year consisted of a First Cash Component based on adjusted pre-tax income and a Second Cash and Equity Component related to cash flow generation and SG&A containment. Bonuses were also discretionary for other named executive officers.

Although Messrs. Horton and Tomnitz achieved the performance targets for cash flow and SG&A containment, the Compensation Committee decided to reduce their potential $8 million bonus to $1 million each. This decision was made at the Compensation Committee's discretion, taking into account the company's consolidated financial results and the ongoing challenges within the homebuilding industry.

No, the Board of Directors approved director fees, committee member fees, and committee chairperson fees for the current fiscal year with no increase or decrease compared to the fees paid in the prior fiscal year. These fees are paid only to non-management directors.

While the filing doesn't provide a full financial statement, it implies that D.R. Horton, Inc. experienced a lack of positive adjusted pre-tax income in the last three quarters of fiscal year 2008, which impacted bonus payouts. The reduction in executive bonuses also reflects broader difficulties faced by the homebuilding industry.