8-KLeadership ChangesMaterial AgreementsExhibits & Filings

HORTON D R INC /DE/ 8-K Report, Material Agreement (Dec 16, 2008)

Filed December 16, 2008For Securities:DHI

Summary

This Form 8-K filing from D.R. Horton, Inc. reports on amendments made to its equity and incentive compensation plans, specifically the Deferred Compensation Plan and the Supplemental Executive Retirement Plan No. 2. The primary driver for these amendments was to ensure compliance with Section 409A of the Internal Revenue Code, which governs non-qualified deferred compensation. The company undertook a comprehensive review to align its plans with Section 409A regulations, including mechanics for deferral and payout elections, and timing of payments. The key changes focus on addressing "grandfathered accounts" (earned and vested before December 31, 2004) versus accounts subject to Section 409A. Amendments include default lump-sum payout rules upon separation from service, a mandated six-month delay for "specified employees" receiving distributions, and modifications to eligibility and payout timing for both pre- and post-2005 accounts. The company also introduced stricter rules regarding changes to distribution elections, requiring them to be made well in advance and deferring payouts for at least an additional five years.

Key Highlights

  • 1D.R. Horton has amended and restated its Deferred Compensation Plan and Supplemental Executive Retirement Plan No. 2 to comply with Section 409A of the Internal Revenue Code.
  • 2The amendments aim to ensure that all payments made under these plans are either exempt from or in compliance with Section 409A regulations.
  • 3Distinctions have been made between pre-2005 "grandfathered accounts" not subject to Section 409A and post-2004 accounts that are.
  • 4New default rules for lump-sum payouts upon separation from service have been implemented.
  • 5A mandatory six-month delay on distributions for "specified employees" upon separation from service is now in effect, unless specific exceptions apply.
  • 6The company has clarified and modified payout timing rules for both pre- and post-2005 accounts based on termination dates.
  • 7Stricter provisions have been added to restrict changes to the time and form of payments, requiring elections to be made more than 12 months in advance and deferring payments for at least five additional years.

Frequently Asked Questions

The main reason for the amendments is to ensure compliance with Section 409A of the Internal Revenue Code, which dictates how non-qualified deferred compensation plans are structured and administered.

Executive officers of D.R. Horton are participants in these plans. Directors are also eligible to participate in the Deferred Compensation Plan. Therefore, these amendments affect executive compensation and director benefits.

The plans now include a default lump-sum payout option upon separation from service, with a mandatory six-month delay for "specified employees." Specific rules for distributing both pre-2005 and post-2005 accounts have been clarified based on the timing of a participant's termination. Additionally, any changes to payout elections must be made more than 12 months before the scheduled payment and will result in a deferral of at least five additional years.

Yes, accounts that were earned and vested on or before December 31, 2004, are considered "grandfathered accounts" and are not subject to the Section 409A compliance requirements imposed on post-2004 benefits.