8-KMaterial AgreementsExhibits & Filings

HORTON D R INC /DE/ 8-K Report, Material Agreement (Nov 1, 2024)

Filed November 1, 2024For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) announced an amendment to its Stockholder's Agreement with Forestar Group Inc. (Forestar) on October 28, 2024. The primary change involves an increase in the approval thresholds for investment decisions and capital expenditures made by Forestar. Specifically, the threshold requiring Forestar's Investment Committee to have sole responsibility for investment decisions involving capital expenditures of $20 million or less has been raised to $45 million. Similarly, the threshold requiring D.R. Horton's prior written consent for Forestar to acquire businesses, operations, or make significant investments exceeding $20 million has also been increased to $45 million. These new thresholds are subject to annual adjustments based on the S&P CoreLogic Case-Shiller U.S. National Home Price Index. If the index shows a negative change, the threshold will remain the same. It's important to note that these changes are contingent upon Forestar's stockholders approving an amendment to Forestar's Certificate of Incorporation (Charter Amendment) at their 2025 Annual Meeting. Until such approval, the existing Charter provisions will remain in effect. D.R. Horton currently owns approximately 62% of Forestar's outstanding common stock.

Key Highlights

  • 1Amended and Restated Stockholder's Agreement entered into between D.R. Horton and Forestar on October 28, 2024.
  • 2Increased the Capital Expenditure (CapEx) threshold for Forestar's Investment Committee's sole responsibility from $20 million to $45 million.
  • 3Increased the CapEx threshold requiring D.R. Horton's prior written consent for Forestar acquisitions or significant investments from $20 million to $45 million.
  • 4New thresholds are subject to annual adjustments based on changes in the S&P CoreLogic Case-Shiller U.S. National Home Price Index.
  • 5Adjustments will not occur if the Case-Shiller Index shows a negative annual change.
  • 6The effectiveness of the amended agreement is subject to stockholder approval of a Charter Amendment at Forestar's 2025 Annual Meeting.
  • 7D.R. Horton holds a controlling stake, owning approximately 62% of Forestar's common stock.

Frequently Asked Questions

The agreement significantly increases the financial thresholds for investment decisions and acquisitions that require either Forestar's Investment Committee's sole approval or D.R. Horton's prior written consent. These thresholds have been raised from $20 million to $45 million, allowing Forestar more autonomy in executing larger transactions without immediate D.R. Horton involvement.

The $45 million thresholds will be subject to annual adjustments based on the one-year percentage change in the S&P CoreLogic Case-Shiller U.S. National Home Price Index. If the index increases, the threshold will be adjusted upwards accordingly. However, if the index shows a decrease, the threshold will remain at its current level until the next adjustment date.

No, the changes are not immediately effective. The Amended and Restated Stockholder's Agreement is contingent upon Forestar's stockholders approving a proposed amendment to Forestar's Certificate of Incorporation (Charter Amendment) at Forestar's 2025 Annual Meeting. Until this approval, the existing provisions in Forestar's Charter will remain in effect, notwithstanding the new agreement.

D.R. Horton is the majority shareholder of Forestar, owning approximately 62% of its common stock. This controlling interest gives D.R. Horton significant influence over Forestar, which is why their Stockholder's Agreement dictates certain approval levels for Forestar's major financial decisions. The amendment reflects a change in the delegated authority within this relationship.