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 (Date of earliest event reported): November 8, 2012
D.R. Horton, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 1-14122 | 75-2386963 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
301 Commerce Street, Suite 500, Fort Worth, Texas 76102
(Address of principal executive offices)
Registrant’s telephone number, including area code: (817) 390-8200
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 (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | 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) Compensatory Arrangements of Certain Officers
2012 Fiscal Year Compensation of Chairman and Chief Executive Officer.
On November 8, 2012, the Compensation Committee of the Board of Directors determined and approved the performance compensation to be paid to Donald R. Horton, Chairman, and to Donald J. Tomnitz, President and Chief Executive Officer, for the fiscal year ended September 30, 2012 (“2012 fiscal year”). Under the 2012 fiscal year cash performance bonus program, Mr. Horton and Mr. Tomnitz each had the opportunity to earn a cash performance bonus up to a maximum of 2% of the consolidated pre-tax income of the Company for each semi-annual period in the 2012 fiscal year. Under this program, Mr. Horton and Mr. Tomnitz each received $1,430,479 for the semi-annual period ended March 31, 2012 and each received $999,428 for the semi-annual period ended September 30, 2012 resulting in Mr. Horton and Mr. Tomnitz each receiving a total cash bonus in the amount of $2,429,907 or 1% of consolidated pre-tax income for the 2012 fiscal year. The Compensation Committee used its discretion to reduce the percentage paid from a maximum of 2% to an actual paid of 1% for the 2012 fiscal year.
Performance Determination of Fiscal 2010 Grant of Performance Restricted Stock Units.
On September 30, 2010, the Compensation Committee made an award of long-term performance restricted stock units (“Performance RSUs”) under the 2006 Stock Incentive Plan (“2006 Plan”) to Mr. Horton and Mr. Tomnitz. The performance period for the Performance RSUs was October 1, 2010 to September 30, 2012 (the “Performance Period”).
Vesting of the Performance RSUs was based on four performance goals. The four performance goals were (i) relative total shareholder return (“TSR”), (ii) relative return on investment (“ROI”), (iii) relative selling, general and administrative expense containment (“SG&A”) and (iv) relative gross profit (“GP”) (collectively, the “Performance Goals”). Each Performance Goal is weighted twenty-five percent (25%) of the target number of Performance RSUs. The Performance RSUs had a target amount of 100,000 which could be increased or decreased based on performance rankings at the end of the Performance Period.
After completion of the Performance Period, the Compensation Committee evaluated the relative peer group rankings for the four performance goals and the terms of the Performance RSUs and determined that Mr. Horton and Mr. Tomnitz each vested in 162,500 Performance RSUs. The Compensation Committee approved payout of the Performance RSUs to each of Mr. Horton and Mr. Tomnitz in the form of 162,500 shares of common stock.
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2013 Fiscal Year Compensation Program of Chairman and Chief Executive Officer.
The base salaries, annual performance-based bonus plans, and other benefits for Mr. Horton and Mr. Tomnitz for the fiscal year ending September 30, 2013 (“2013 fiscal year”) were also approved by the Compensation Committee. Mr. Horton’s base annual salary remains unchanged at $1,000,000 and Mr. Tomnitz’s base annual salary remains unchanged at $900,000. Mr. Horton and Mr. Tomnitz also have the opportunity to earn cash bonuses of up to 1% of consolidated pre-tax income determined in accordance with generally accepted accounting principles and based on two semi-annual performance periods during the 2013 fiscal year. The primary components of the 2013 fiscal year compensation program for each of Mr. Horton and Mr. Tomnitz are set forth in Exhibit 10.1 to this Form 8-K and Exhibit 10.1 is hereby incorporated by reference into this Item 5.02.
Three-Year Performance Restricted Stock Units Award—Vesting September 30, 2015.
On November 8, 2012, the Compensation Committee approved an award of performance restricted stock units (“Performance RSUs”) pursuant to the Company’s 2006 Stock Incentive Plan, as amended and restated (“2006 Plan”) to the following executive officers and in the following amounts:
| Target # of Performance | ||||
| Name |
Office |
Restricted Stock Units | ||
| Donald R. Horton |
Chairman of the Board | 200,000 | ||
| Donald J. Tomnitz |
President and CEO | 150,000 |
The Performance RSUs relate to a three-year performance period beginning on October 1, 2012 and ending on September 30, 2015 (the “2015 Performance Period”). The Performance RSU will vest if four performance goals are satisfied. The four performance goals relate to relative total shareholder return (“TSR”), relative return on investment (“ROI”), relative selling, general and administrative expense containment (“SG&A”) and relative gross profit (“GP”) (collectively, the “Performance Goals”). Each Performance Goal is weighted twenty-five percent (25%) of the target number of Performance RSUs. The target number of Performance RSUs may be increased to a maximum number of 400,000 for Mr. Horton and 300,000 for Mr. Tomnitz upon maximum achievement of each of the four Performance Goals and decreased to a minimum number of zero upon minimum achievement of each of the four Performance Goals. Performance and percentages that fall between the maximum RSUs, the Target RSUs and the minimum (zero) RSUs shall be ranked using linear interpolation. The Company’s peer group includes ten publicly traded homebuilding companies, and with the Company included, includes eleven homebuilding companies in the final rankings.
Each Performance RSU represents the contingent right to receive one share of the Company’s common stock if vesting is satisfied. The Compensation Committee reserves the sole discretion to pay the final earned and vested Performance RSUs in equity, cash or a combination of both. The Performance RSUs have no rights to dividends or voting.
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Vesting of the TSR Performance Goal component will be determined after the 2015 Performance Period based on a comparison of the Company’s TSR to the S&P 500 Index’s TSR as computed by Standard and Poor’s using their TSR methodology. Vesting of the ROI, SG&A and GP Performance Goal components will be determined after the 2015 Performance Period based on the relative ranking of the Company’s performance on each Performance Goal to each peer group company’s performance on each Performance Goal. Any portion of the Performance RSUs that do not vest due to inadequate relative performance will be forfeited. The Compensation Committee may use its sole discretion to adjust downward, in part or in whole the vested Performance RSUs or the value of the Performance RSUs based on performance of the Company, including based on total annual pre-tax income or stock price of the Company, the performance of the participant or other factors.
2012 Fiscal Year Compensation of Other Named Executive Officers.
The Board of Directors on recommendation of the Compensation Committee approved discretionary bonuses to the executive officers listed below consistent with past practices. The executive officers set forth below were “named executive officers” (as defined in Item 402(a)(3) of Regulation S-K) of the Company as of the end of the Company’s 2012 fiscal year. There have been no changes to the discretionary bonus plans of the below listed named executive officers as previously approved by the Board of Directors. A summary of the bonuses is as follows:
| Annual | ||||
| Discretionary Bonus | ||||
| for the Year Ended | ||||
| Name |
Office |
September 30, 2012 | ||
| Bill W. Wheat |
Executive Vice President and Chief Financial Officer |
$450,000 | ||
| Stacey H. Dwyer |
Executive Vice President and Treasurer | $450,000 | ||
For each of Mr. Wheat and Ms. Dwyer, $200,000 of the annual bonus related to the six months ended March 31, 2012 and $250,000 related to the six months ended September 30, 2012.
2013 Fiscal Year Compensation of Other Named Executive Officers.
The Board of Directors established and approved the 2013 fiscal year annual base salaries and 2013 fiscal year compensation programs for each of Bill W. Wheat and Stacey H. Dwyer. A summary of the 2013 compensation program for each of Mr. Wheat and Ms. Dwyer is set forth in Exhibit 10.2 to this Form 8-K and Exhibit 10.2 is hereby incorporated by reference into this Item 5.02.
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Board and Committee Compensation.
On November 8, 2012, the Board of Directors of the Company approved cash director fees, committee member fees and committee chairperson fees to be paid to non-management directors of the Company in the 2013 fiscal year. All cash director fees remained at the same levels from the prior 2012 fiscal year. Board of Directors fees are $15,000 per meeting but not to exceed $60,000 per year. Director fees, committee fees and chairperson fees are only paid to non-management directors. The Board of Directors further approved an annual restricted stock retainer to each non-management director in the form of restricted stock or restricted stock units in an amount not to exceed 10,000 restricted shares of the Company’s common stock over a three year period or (i) 3,333 shares for the retainer period of January 2013 to January 2014; (ii) 3,333 shares for the retainer period of January 2014 to January 2015; and (iii) 3,334 shares for the retainer period of January 2015 to January 2016. The retainer restricted stock will be awarded at the meeting of the Board of Directors following the Company’s Annual Meeting of Stockholders to be held on January 24, 2013.
A summary of the non-management director, committee and chairperson fees is set forth in Exhibit 10.3 to this Form 8-K and Exhibit 10.3 is hereby incorporated by reference into this Item 5.02.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. |
| 10.1 | Summary of Executive Compensation Notification – Chairman and Chief Executive Officer | |||
| 10.2 | Summary of Executive Compensation Notification – Other Executive Officers | |||
| 10.3 | Summary of Director, Committee and Chairperson Compensation | |||
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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.
| D. R. Horton, Inc. | ||||||
| Date: November 15, 2012 | By: | /s/ THOMAS B. MONTANO | ||||
| Thomas B. Montano | ||||||
| Vice President and Corporate and Securities Counsel | ||||||
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EXHIBIT INDEX
| Exhibit |
Description | |
| 10.1 | Summary of Executive Compensation Notification – Chairman and Chief Executive Officer | |
| 10.2 | Summary of Executive Compensation Notification – Other Executive Officers | |
| 10.3 | Summary of Director, Committee and Chairperson Compensation | |
Exhibit 10.1
Executive Compensation Notification
Chairman and Chief Executive Officer
2013 Fiscal Year Compensation Program of Chairman and Chief Executive Officer.
2013 Fiscal Year Base Salaries: Table I below sets forth the 2013 fiscal year base salaries for Mr. Horton and Mr. Tomnitz.
Table I
| Name |
Office |
Annual Base Salary (2013 Fiscal Year) |
Performance Bonus (2013 Fiscal Year) | |||
| Donald R. Horton | Chairman of the Board | $1,000,000 | See Below | |||
| Donald J. Tomnitz | Vice Chairman, President and CEO |
$900,000 | See Below | |||
2013 Fiscal Year Annual Performance Bonus: The Compensation Committee approved performance-based goals for measuring short-term performance bonuses that may be earned by Mr. Horton and Mr. Tomnitz during the 2013 fiscal year. The 2013 performance goals were established under the Company’s 2000 Amended and Restated Incentive Bonus Plan. The 2013 fiscal year performance goal for Mr. Horton and Mr. Tomnitz relates to achieving positive consolidated pre-tax income as set forth below.
Annual Performance Bonus – Performance Related to Pre-Tax Income:
Under the 2013 fiscal year performance bonus program, each of Mr. Horton and Mr. Tomnitz has the opportunity to earn the following performance-based bonus:
| (1) | Up to 1.0% of Pre-Tax Income of the Company for the six-month period ending March 31, 2013 (but not below $0), and |
| (2) | Up to 1.0% of Pre-Tax Income of the Company for the six-month period ending September 30, 2013 (but not below $0). |
“Pre-Tax Income” shall mean income before income taxes, as publicly reported by the Company in its quarterly or annual financial statements, as applicable, prepared in accordance with generally accepted accounting principles. The financial statements shall mean the consolidated financial statements of the Company.
At the end of the 2013 fiscal year, the Committee may use its sole discretion to adjust downward, in part or in whole, the Annual Performance Bonus based on performance of the Company, including based on total annual Pre-Tax Income, and performance of the participant. Provided that for the fiscal year ending September 30, 2013 that no more than 1% of Pre-Tax Income for the year shall be paid to Mr. Horton or Mr. Tomnitz under this bonus plan.
Other Long-Term Benefits.
Consistent with prior years, Mr. Horton and Mr. Tomnitz may participate in two separate deferred compensation plans. The first plan allows the executive to make voluntary income deferrals. The second plan is a promise by the Company to pay retirement benefits to the executive. Furthermore, if the executive is employed by the Company on the last day of the current fiscal year (for example September 30, 2013), then the Company will establish a liability to him equal to 10% of his annual base salary as of the first day of the current fiscal year (for example October 1, 2012). This liability will accrue earnings in future years at a rate established by the administrative committee.
Exhibit 10.2
Summary of Executive Compensation Notification
Other Executive Officers
2013 Fiscal Year Compensation of Certain Other Named Executive Officers.
The Board of Directors also established and approved the 2013 fiscal year annual base salaries of our other named executive officers. The salaries and other compensation approved are as set forth below in Table II.
Table II
| Name |
Office |
Annual Base Salary (2013 Fiscal Year) |
Discretionary Bonus Plan (2013 Fiscal Year) | |||
| Bill W. Wheat | Executive Vice President and CFO |
$500,000 | See Note II | |||
| Stacey H. Dwyer | Executive Vice President and Treasurer |
$350,000 | See Note II | |||
Note II:
The Board of Directors may award discretionary bonuses to the executives listed in Table II above based on the performance of these executives. In addition, Mr. Wheat and Ms. Dwyer may participate in two separate deferred compensation plans. The first plan allows the executive to make voluntary income deferrals. The second plan is a promise by the Company to pay retirement benefits to the executive. Furthermore, if the executive is employed by the Company on the last day of the current fiscal year (for example September 30, 2013), then the Company will establish a liability to him or her equal to 10% of his or her annual base salary as of first day of the current fiscal year (for example October 1, 2012). This liability will accrue earnings in future years at a rate established by the administrative committee.
Exhibit 10.3
Summary of Board and Committee Compensation
The Board of Directors of the Company approved cash director fees, committee member fees and chairperson fees to be paid to non-management directors of the Company in the 2013 fiscal year. Director fees, committee fees and chairperson fees are only paid to non-management directors as summarized below:
Each non-management director will receive a director fee of $15,000 per Board meeting attended in person or by tele-conference, paid quarterly and not to exceed $60,000 per year.
Each non-management director who serves on a committee of the Board of Directors will receive a fee of $1,250 per committee meeting attended in person or by tele-conference, paid quarterly and not to exceed $5,000 per year.
Each non-management director who serves as the chairperson of a committee of the Board of Directors shall receive a fee of $625 per committee meeting attended in person or by tele-conference, paid quarterly and not to exceed $2,500 per year.
The Board of Directors approved an annual restricted stock retainer to each non-management director in the form of restricted stock or restricted stock units in an amount not to exceed 10,000 restricted shares of the Company’s common stock over a three year period or (i) 3,333 shares for the retainer period of January 2013 to January 2014; (ii) 3,333 shares for the retainer period of January 2014 to January 2015; and (iii) 3,334 shares for the retainer period of January 2015 to January 2016. The retainer restricted stock will be awarded at the meeting of the Board of Directors following the Company’s Annual Meeting of Stockholders to be held on January 24, 2013.