8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

Date of Report: October 2, 2008
(Date of earliest event reported)

KB HOME

(Exact name of registrant as specified in charter)

Delaware
(State or other jurisdiction of incorporation) 1-9195
(Commision File Number) 95-3666267
(IRS Employer Identification No.)

10990 Wilshire Boulevard, Los Angeles, California 90024
(Address of principal executive offices)              (Zip Code)

Registrant’s telephone number, including area code: (310) 231-4000

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) Fiscal Year 2009 Long-Term Incentive Awards

On October 2, 2008, the Management Development and Compensation Committee of KB Home’s Board of Directors (the “Committee”) granted long-term incentive awards for fiscal year 2009 to the named executive officers identified below and certain other senior executives. The grants to the named executive officers identified below consisted of cash-settled phantom shares and cash-settled stock appreciation rights (“SARs”).

The phantom shares and SARs granted on October 2, 2008 are purely cash-settled, and do not entitle recipients to receive any shares of the Company’s common stock. The descriptions set forth below of the phantom shares and SARs granted on October 2, 2008 are qualified by reference to the forms of award agreements, which are attached as exhibits to this Current Report on Form 8-K.

Phantom Shares. Each phantom share entitles a recipient to a cash payment equal to the fair market value of one share of the Company’s common stock on the date it vests, plus the cumulative value of all cash dividends paid in respect of one share of the Company’s common stock from and including the grant date through and including the vesting date. Each phantom share granted on October 2, 2008 vests on October 3, 2011.

Stock Appreciation Rights. Each SAR, once vested, entitles a recipient to receive a cash payment equal to the spread between its grant price and the fair market value of one share of the Company’s common stock on the date of exercise. The grant price for the SARs granted on October 2, 2008 is $19.90. Each SAR granted on October 2, 2008 has a ten-year term from the date of grant and vests in equal annual installments over a three-year period.

The Company’s named executive officers who were granted fiscal year 2009 long-term incentive awards received SARs and phantom shares in the following amounts:

Officer	SARs	Phantom Shares
Jeffrey T. Mezger	397,818	43,970
William R. Hollinger	79,564	8,794
Kelly Masuda	51,148	5,654

Item 9.01 Financial Statements and Exhibits.

(d)	Exhibits
10.42	Form of Fiscal Year 2009 Stock Appreciation Rights Agreement.
10.43	Form of Fiscal Year 2009 Phantom Shares Agreement.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 8, 2008

KB Home
By:	/s/ Wendy C. Shiba
	Wendy C. Shiba
	Executive Vice President, General Counsel and Secretary

EXHIBIT INDEX

Exhibit No.	Description
10.42	Form of Fiscal Year 2009 Stock Appreciation Rights Agreement.
10.43	Form of Fiscal Year 2009 Phantom Shares Agreement.

EX-10.42

EXHIBIT 10.42

AMENDED AND RESTATED KB HOME 1999 INCENTIVE PLAN

STOCK APPRECIATION RIGHTS AGREEMENT

(FISCAL YEAR 2009)

     This Stock Appreciation Rights Agreement (this “Agreement”) is made on October 2, 2008 (the “Grant Date”) between KB Home, a Delaware corporation (the “Company”), and [NAME] (the “Participant”). Capitalized terms used in this Agreement and not defined herein have the respective meanings given them in the Amended and Restated KB Home 1999 Incentive Plan, as amended on October 2, 2008 (the “Plan”).

     WHEREAS, the Company desires to grant the Participant cash-settled Stock Appreciation Rights (the “Award”) pursuant to Section 8 of the Plan;

     WHEREAS, the Award is intended, if the Participant is a Covered Employee, to constitute Qualified Performance-Based Compensation and a Performance-Based Award granted pursuant to Section 11 of the Plan; and

     WHEREAS, the Award is intended to constitute a “stock appreciation right” not providing for the deferral of compensation under, and is therefore exempt from, Section 409A of the Code.

     NOW, THEREFORE, in consideration of the foregoing, the Company and the Participant enter into this Agreement as follows:

A G R E E M E N T

     1. Grant. Subject to the terms of the Plan and this Agreement, the Company hereby grants to the Participant an Award calculated by reference to an aggregate of [# RIGHTS] stock appreciation rights (the “Rights”). Subject to the limitations set forth in Section 5, each Right entitles the Participant to receive the positive difference, if any, between the grant price of $19.90 (the “Grant Price”) and the Fair Market Value of a share of common stock, $1.00 par value per share, of the Company (“Common Stock”) on the date of exercise (the “Spread”). The Award is intended to constitute Qualified Performance-Based Compensation, a “stock appreciation right” under Section 409A, and, if the Participant is a Covered Employee, a Performance-Based Award. The Rights may be exercised, and the Award may be paid, only as provided under this Agreement.

     2. Rights Vesting and Forfeiture.

(a) Normal Rights Vesting. Subject to the limitations set forth in Section 5, the Rights granted under this Agreement will vest and may be exercised in accordance with the following vesting schedule if the Participant is employed by the Company or its Subsidiaries on the respective dates indicated below:

On or After		Rights Subject to Exercise
October 2, 2009		33-1/3% of Rights
October 4, 2010	an additional	33-1/3% of Rights
October 3, 2011	an additional	33-1/3% of Rights

(b) Forfeiture. Except as provided in Section 3 below with respect to the Participant’s Retirement and subject to Section 2(a) above and Section 4 below, the Participant will immediately forfeit all rights, title and interests in and to any portion of the Rights that have not vested on the date the Participant’s employment with the Company or its Subsidiaries is terminated.

     3. Accelerated Rights Vesting. Notwithstanding Section 2 above, subject to the limitations set forth in Section 5, 100% of the Rights granted hereunder will vest and become immediately exercisable upon a Change of Ownership of the Company, as provided under the applicable terms of the Plan, or upon the Participant’s Retirement. “Retirement” means severance from employment with the Company or its Subsidiaries for any reason other than a leave of absence, termination for cause, death or disability, at such time as the sum of the Participant’s age and years of service with the Company or its Subsidiaries equals at least 65 or more, provided that the Participant is then at least 55 years of age. The Company will have the sole right to determine whether the Participant’s severance from employment constitutes a Retirement.

     4. Rights Termination. Vested Rights will cease to be exercisable and will expire and terminate to the extent not exercised upon the date (the “Expiration Date”) that is the earlier of (i) the close of business on the tenth anniversary of the Grant Date and (ii) the dates set forth below in this Section 4.

(a)	Employment Termination Other Than For Cause or Retirement. If the Participant’s employment with the Company or its Subsidiaries is terminated for any reason other than for cause or Retirement (in each case, as determined by the Company), the date that is 90 calendar days after the date of such termination.
(b)	Employment Termination for Cause. If the Participant’s employment with the Company or its Subsidiaries is terminated for cause (as determined by the Company), the date that is 5 calendar days after the date of such termination.
(c)	Death. In the event of the Participant’s death (i) while the Participant is employed by the Company or its Subsidiaries, (ii) within 90 days of the date the Participant’s employment with the Company or its Subsidiaries is terminated for any reason other than for cause or Retirement (in each case, as determined by the Company) or (iii) in the event of the Participant’s Retirement (as determined by the Company) prior to the date set forth in clause (i) of the first sentence of this Section 4, the first anniversary of the date of death.

     5. Rights Exercise and Payment. To exercise any number of the Rights that have vested, and to be entitled to payment of any portion of the Award, the Company must receive written notice of exercise specifying the number of Rights to be exercised. The Rights will be deemed exercised upon receipt of the exercise notice attached as Exhibit A (the “Exercise Notice”). Upon exercise of any number of the Rights that have vested, the Spread will be determined by the Fair Market Value per share of the Common Stock on the date the Exercise Notice is received by the Company and will be paid in cash as soon as reasonably practicable following such receipt; provided however, that in the event that the aggregate amount of cash payable to the Participant in respect of any and all Award(s) under the Plan (including, but not limited to, any phantom stock awards) in any fiscal year of the Company would exceed (i) $5,000,000 if the Participant is the Chief Executive Officer at the time of such payment or (ii) $3,000,000 if the Participant is not described in clause (i) of this Section 5, the Rights shall not be exercisable with respect to such excess amount until such time that such portion of the Rights could be exercised without exceeding the applicable limit, subject to the provisions of Section 4. The Company has the authority to deduct or withhold an amount sufficient to satisfy applicable federal, state, local and foreign taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any taxable event arising from the exercise of any vested Rights or payment of any portion of the Award.

     6. No Stockholder Rights. The Participant, and any Permitted Transferee (as defined in Section 10 hereof), will not be deemed to be a holder of or possess any stockholder rights with respect to any shares of Common Stock based on the Rights granted hereunder.

     7. Adjustments. In the event of any of the transactions described in Section 13(a) of the Plan, the Committee shall adjust or revise the Award in accordance with the terms of the Plan; provided that such an adjustment of the Award shall be made only to the extent that such adjustment will not cause a violation of Section 409A.

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     8. California Law. This Agreement will be construed, administered and enforced in accordance with the laws of the State of California.

     9. Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersedes all prior and contemporaneous oral and written agreements and understandings relating to such subject matter. THE PARTICIPANT ACKNOWLEDGES AND AGREES TO BE BOUND TO, AND THAT THE AWARD AND THE RIGHTS ARE GRANTED SUBJECT TO, ALL OF THE TERMS AND CONDITIONS OF THE PLAN, INCLUDING ANY TERMS, RULES OR DETERMINATIONS MADE BY THE COMMITTEE PURSUANT TO ITS ADMINISTRATIVE AUTHORITY UNDER THE PLAN, AND THAT IN THE EVENT OF ANY CONFLICT BETWEEN THIS AGREEMENT AND THE PLAN, THE PLAN WILL PREVAIL.

     10. Non-Transferability. None of this Agreement, the Award or the Rights may be assigned by the Participant by operation of law or otherwise, except that vested Rights may be transferred upon death by will or by the laws of descent and distribution to members of the Participant’s family or to trusts or other entities whose beneficiaries are members of the Participant’s family. Any purported assignment by the Participant that is not permitted hereunder shall be null and void. This Agreement shall, however, be binding upon the successors and assigns of the Company.

     11. No Obligation. Neither the execution and delivery hereof nor the granting of the Award or the Rights will constitute or be evidence of any agreement or understanding, express or implied, on the part of the Company or any of its Subsidiaries to employ or continue the employment of the Participant for any period or in any capacity.

     12. Notice. Any notice given hereunder to the Company will be addressed to the Company, attention: Senior Vice President, Human Resources, or a designee or successor thereof, and any notice given hereunder to the Participant will be addressed to the Participant at his or her address as shown on the records of the Company.

     13. Section 409A. The Award and the Rights thereunder are intended to constitute “stock appreciation rights” that do not constitute “nonqualified deferred compensation” within the meaning of Section 409A and are therefore exempt from Section 409A. This Agreement shall be interpreted in accordance with Section 409A, to the extent applicable, including without limitation any Treasury Regulations or other Department of Treasury guidance that may be issued or amended after the date hereof. In the event that, following the date hereof, the Committee determines that the Award or the Rights may be subject to Section 409A, including such Department of Treasury guidance as may be issued after the date hereof, the Committee may, in its discretion, adopt such amendments to the Plan or this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate to (i) exempt the Award and the Rights from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Award and the Rights, or (ii) comply with the requirements of Section 409A; provided that no such amendment may change the Performance Goal with respect to any person who is a Covered Employee.

     14. Rescission. This Agreement, the Award and the Rights will be subject to rescission by the Company if an original of this Agreement executed by the Participant is not received by the Company within four weeks of the Grant Date.

[Continued on the next page]

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     IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the Participant have executed this Agreement as of the day and year first above written.

KB HOME
By:	Jeffrey T. Mezger
	Chief Executive Officer and President
PARTICIPANT:
By:
	[NAME]

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EXHIBIT A

EXERCISE NOTICE

STOCK APPRECIATION RIGHTS

KB Home

Attn: Senior Vice President, Human Resources

     Please be advised that I elect to exercise _________ vested Rights granted to me by KB Home under and subject to the terms and provisions of Amended and Restated KB Home 1999 Incentive Plan and the Stock Appreciation Rights Agreement dated _______________, 200[___].

Name:

Address:

 

Social Security #:

Date:

Signature:

Received by KB Home this ___day of _______________, ______.

By:  

Its:  

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EX-10.43

EXHIBIT 10.43

KB HOME
FISCAL YEAR 2009 PHANTOM SHARES AGREEMENT

     This Phantom Shares Agreement (this “Agreement”) is made on October 2, 2008 (the “Grant Date”) between KB Home, a Delaware corporation (the “Company”), and [NAME] (the “Employee”).

     WHEREAS, the Company desires to grant the Employee Phantom Shares (the “Award”);

     WHEREAS, the Award is a cash-based award designed to promote the interests of the Company and its stockholders by retaining exceptional employees;

     WHEREAS, the Award is intended to constitute compensation that is payable within the “short-term deferral” period after the Rights (as defined below) are no longer subject to a “substantial risk of forfeiture” and that does not provide for the deferral of compensation under, and is therefore exempt from, Section 409A of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), together with the Department of Treasury Regulations and other interpretative guidance issued thereunder (“Section 409A”); and

     WHEREAS, the Award granted hereunder is not being issued pursuant to any the Amended and Restated KB Home 1999 Incentive Plan, as amended on October 2, 2008 (the “Plan”), or pursuant to any other existing plan.

     NOW, THEREFORE, in consideration of the foregoing, the Company and the Employee enter into this Agreement as follows:

A G R E E M E N T

     1. Grant. Subject to the terms of this Agreement, the Company hereby grants to the Employee an Award calculated by reference to an aggregate of [# RIGHTS] phantom share rights (the “Rights”). Each Right, when fully vested hereunder, will represent the economic equivalent of ownership of one share (“Share”) of common stock, $1.00 par value per Share, of the Company (“Common Stock”); provided that the Rights will not entitle the Employee to, and the Employee will not have any rights in, or own any, Shares of Common Stock. The Award is intended to constitute compensation that is payable within the “short-term deferral” period after the Rights are no longer subject to a “substantial risk of forfeiture” under Section 409A.

     2. Rights Vesting.

(a)

Normal Rights Vesting. The Rights granted under this Agreement will vest on October 3, 2011 only if the Employee is employed by the Company or any “subsidiary corporation” as defined in Section 424(f) of the Code and any applicable regulations promulgated thereunder or any other entity of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company (each, a “Subsidiary”) on such date.

(b)

Change of Ownership. Notwithstanding the foregoing and subject to Section 3, the Rights granted under this Agreement will vest upon a Change of Ownership (as such term is defined in the Plan) of the Company.

     3. Forfeiture. Subject to Section 2, the Employee will immediately forfeit all rights, title and interests in and to any and all Rights that have not vested on the date the Employee’s employment with the Company or its Subsidiaries is terminated.

     4. Payment.

(a) As soon as reasonably practicable following the date of vesting of the Rights in accordance with Section 2 above (the “Vesting Date”), but in no event later than the later

	of (i) the fifteenth day of the third month following the end of the Employee’s first taxable year in which the Vesting Date occurs or (ii) the fifteenth day of the third month following the end of the Company’s first taxable year in which the Vesting Date occurs, the Company will pay to the Employee for each vested Right an amount in cash equal to (A) the Fair Market Value (as defined below) of one Share of Common Stock as of the Vesting Date, plus (B) the cumulative value of all cash dividends paid in respect of a Share of Common Stock from the Grant Date through and including the Vesting Date.
(b)	For purposes of this Agreement, “Fair Market Value” shall have the meaning given that term in the Plan.
(c)	The Company has the authority to deduct or withhold an amount sufficient to satisfy applicable federal, state, local and foreign taxes (including the Employee’s FICA obligation) required by law to be withheld with respect to any taxable event arising from the vesting of any Rights or payment of any portion of the Award.

     5. No Stockholder Rights. The Employee will not be deemed to be a holder of or possess any stockholder rights with respect to any Shares of Common Stock in connection with the Rights granted hereunder.

     6. Adjustments. In the event of any of the transactions described in Section 13(a) of the Plan, the Management Development and Compensation Committee (the “Committee”) of the Company shall adjust or revise the Award in the same manner as it then adjusts any similar awards under the Plan; provided that such an adjustment of the Award shall be made only to the extent that such adjustment will not cause a violation of Section 409A.

     7. California Law. This Agreement will be construed, administered and enforced in accordance with the laws of the State of California.

     8. Entire Agreement.

(a)	This Agreement sets forth the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersedes all prior and contemporaneous oral and written agreements and understandings relating to such subject matter.
(b)	Subject to applicable law, this Agreement, the Award and the Rights shall be administered by the Committee, and the Committee shall have full power and authority to determine and interpret the terms and conditions of this Agreement, the Award, and the Rights, and make any determination and take any other action that the Committee deems necessary or desirable for the administration of this Agreement, the Award, and the Rights, based in each case on such considerations as the Committee in its sole discretion determines.
(c)	All designations, determinations, interpretations, and other decisions under or with respect to this Agreement, the Award and the Rights shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons (as defined below), including, but not limited to, the Company, any Subsidiary, the Employee, any stockholder and any employee of the Company or any Subsidiary. THE EMPLOYEE ACKNOWLEDGES AND AGREES THAT THE COMMITTEE SHALL ADMINISTER THIS AGREEMENT AND THE AWARD, AND THAT THE EMPLOYEE IS BOUND BY, AND THE AWARD AND RIGHTS ARE SUBJECT TO, ANY TERMS, RULES OR DETERMINATIONS MADE BY THE COMMITTEE.

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     9. Non-Transferability. None of this Agreement, the Award or the Rights may be assigned by the Employee by operation of law or otherwise. Any purported assignment by the Employee shall be null and void. This Agreement shall, however, be binding upon the successors and assigns of the Company.

     10. No Obligation. Neither the execution and delivery hereof nor the granting of the Award or the Rights will constitute or be evidence of any agreement or understanding, express or implied, on the part of the Company or any Subsidiary to employ or continue the employment of the Employee for any period or in any capacity.

     11. Notice. Any notice given hereunder to the Company will be addressed to the Company, attention: Senior Vice President, Human Resources, or a designee or successor thereof, and any notice given hereunder to the Employee will be addressed to the Employee at his or her address as shown on the records of the Company.

     12. Amendment and Cancellation. Subject to Section 14 hereof, at any time and from time to time, the Committee may terminate, amend or modify this Agreement. Except with respect to amendments made pursuant to Section 14 hereof, no termination, amendment, or modification of this Agreement will adversely affect in any material way the Award or the Rights granted hereunder without the prior written consent of the Employee.

     13. General Provisions.

(a)	Severability. If any provision of this Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to the Employee or the Award, or would disqualify the Award or the Rights under any law deemed applicable by the Committee, such provision will be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of this Agreement, such provision will be stricken as to such jurisdiction, and the remainder of this Agreement will remain in full force and effect.
(b)	Other Laws. The obligation of the Company to make payment of the Award will be subject to all applicable laws, rules, and regulations, and to such approvals by government agencies as may be required. The Company may refuse to transfer any consideration under this Agreement if, acting in its sole discretion, it determines that transfer of such consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act.
(c)	No Trust or Fund Created. This Agreement is intended to be an “unfunded” plan for incentive compensation. This Agreement will neither create nor be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary or any affiliate and the Employee or any other individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity (each, a “Person”). To the extent that any Person acquires a right to receive payments from the Company or any Subsidiary pursuant to this Agreement, such right will be no greater than the right of any unsecured general creditor of the Company or any Subsidiary.
(d)	Headings. Headings are given to the Sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings will not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision thereof and, in the event of any conflict, the text of this Agreement, rather than such titles or headings, will control.

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     14. Section 409A.

(a)

The Award and the Rights thereunder are intended to constitute compensation that is payable within the “short-term deferral” period after the Rights are no longer subject to a “substantial risk of forfeiture” and that does not constitute “nonqualified deferred compensation” within the meaning of Section 409A. This Agreement shall be interpreted in accordance with Section 409A, to the extent applicable, including without limitation any Treasury Regulations or other Department of Treasury guidance that may be issued or amended after the date hereof. In the event that, following the date hereof, the Committee determines that the Award may be subject to Section 409A, including such Department of Treasury guidance as may be issued after the date hereof, the Committee may, in its discretion, adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate to (i) exempt the Award and Rights from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Award and Rights, or (ii) comply with the requirements of Section 409A.

(b)

An Employee shall be solely responsible and liable for the satisfaction of all taxes, interest, and penalties that may be imposed on such Employee or for such Employee’s account in connection with the Award (including any taxes, interest, and penalties under Section 409A), and neither the Company nor its affiliates shall have any obligation to indemnify or otherwise hold such Employee harmless from any or all of such taxes, interest, or penalties.

     15. Rescission. This Agreement, the Award and the Rights will be subject to rescission by the Company if an original of this Agreement executed by the Employee is not received by the Company within four weeks of the Grant Date.

     16. Term. Upon forfeiture of all of the Employee’s rights, title, and interests in and to any and all of the Rights pursuant to Section 3 above, this Agreement shall terminate and be of no further force or effect.

[Continued on the next page]

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     IN WITNESS WHEREOF, the Company and the Employee have duly executed and delivered this Agreement as of the date first above written.

KB HOME
By:	Jeffrey T. Mezger
	Chief Executive Officer and President
EMPLOYEE:
	[NAME]

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