8-KLeadership ChangesExhibits & Filings

HORTON D R INC /DE/ 8-K Report, Executive Changes (Mar 29, 2022)

Filed March 29, 2022For Securities:DHI

Summary

Hortonville D.R. Inc. (DHI) announced significant adjustments to its executive compensation program, effective immediately, following stockholder feedback and a review by its Compensation Committee. These changes are designed to further align executive incentives with stockholder interests and enhance long-term value creation. The company has responded to feedback from its 2022 Annual Meeting and the advisory vote on executive compensation by modifying both short-term and long-term incentive structures. The core of the revisions involves changes to how short-term incentives are calculated and paid, increasing the weighting of long-term incentives, and introducing more stringent performance metrics for performance-based stock units (PSUs). Specifically, short-term payouts will now be based on reduced percentages of Pre-Tax Income and capped at a total dollar value, with a portion of the Chairman and CEO's awards subject to a two-year holding period. Long-term incentives will represent a greater portion of total compensation, incorporating performance and time-based equity awards with vesting periods of at least three years. Furthermore, PSUs for fiscal year 2022 will require higher relative performance rankings within a peer group to achieve threshold and target payouts.

Key Highlights

  • 1Executive compensation program revised based on stockholder feedback and advisory vote results.
  • 2Short-term incentive payouts will be based on reduced percentages of Pre-Tax Income and subject to a maximum dollar value cap.
  • 3Chairman and CEO's short-term incentive payouts will be split equally between cash and company stock, with equity subject to a 2-year holding period.
  • 4Long-term incentives will constitute a higher percentage of total target compensation for fiscal 2022 and beyond.
  • 5Long-term incentives will include performance restricted stock units (PSUs) and time-based equity awards, with minimum 3-year vesting schedules.
  • 6PSUs for fiscal 2022 require superior relative performance (no less than 6th place threshold, 3rd place target) against a peer group for specific financial metrics.
  • 7New executive compensation agreements are attached as exhibits to the filing.

Frequently Asked Questions

The changes were prompted by a thorough review of the executive compensation program, incorporating feedback received during extensive stockholder outreach in connection with the 2022 Annual Meeting and the results of the 2022 Advisory Vote on Executive Compensation. The Compensation Committee also consulted with an independent compensation advisor.

Short-term incentives will continue to be based on Pre-Tax Income performance, but the total payout amounts will now be based on reduced percentages of Pre-Tax Income. Additionally, payouts will be subject to a maximum annual dollar value cap. For the Chairman and CEO, their earned payout will be split equally between cash and company stock, with the stock portion subject to a two-year holding period.

Long-term incentives will represent a higher percentage of total target compensation for fiscal 2022 and onward. These incentives will consist of both performance restricted stock units (PSUs) and time-based equity awards. All equity awards under the long-term incentive plan will have vesting schedules of no shorter than three years.

For fiscal year 2022, PSUs will require a higher level of relative performance compared to historical grants. The threshold performance ranking must now be no less than 6th place (compared to 9th historically), and the target performance ranking must be no less than 3rd place (compared to 5th historically) relative to a peer group of nine companies for metrics like relative return on investment, relative SG&A containment, and relative gross profit.