-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Whr1mmnTck4EeF2ktB7SoZ2wXTBGae6YIATVlLROWspQRLhDHkOJY/wkjfmMVZiu 7ap6OssxDNXVekVLT25W6w== 0000882184-96-000012.txt : 19961223 0000882184-96-000012.hdr.sgml : 19961223 ACCESSION NUMBER: 0000882184-96-000012 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961220 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HORTON D R INC /DE/ CENTRAL INDEX KEY: 0000882184 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 752386963 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-14122 FILM NUMBER: 96683837 BUSINESS ADDRESS: STREET 1: 1901 ASCENSION BLVD STREET 2: STE 100 CITY: ARLINGTON STATE: TX ZIP: 76006 BUSINESS PHONE: 8178568200 DEF 14A 1 PROXY STATEMENT FOR D.R. HORTON [LOGO OF D R HORTON APPEARS HERE] December 20, 1996 Dear Stockholder: You are cordially invited to attend the 1997 Annual Meeting of Stockholders of D.R. Horton, Inc. to be held on Thursday, January 23, 1997, at 9:30 a.m., Central time, at the corporate offices of D.R. Horton, Inc., 1901 Ascension Blvd., Suite 100, Arlington, Texas. At the meeting, stockholders will be asked to elect nine directors for the ensuing year and to transact such other business as may properly be brought before the meeting. A form of proxy on which to indicate your vote and an envelope, postage prepaid, in which to return your proxy are enclosed. While we would like to have each of you attend the meeting and vote your shares in person, we realize this may not be possible. However, whether or not you plan to attend the meeting, your vote is very important. WE URGE YOU TO COMPLETE, SIGN AND RETURN THE ENCLOSED FORM OF PROXY SO THAT YOUR SHARES WILL BE REPRESENTED. If you decide later to attend the meeting, you may revoke your proxy at that time and vote your shares in person. If you desire any additional information concerning the meeting or the matters to be acted upon thereat, we would be glad to hear from you. Sincerely, Donald R. Horton Chairman of the Board and President D.R. HORTON, INC. 1901 ASCENSION BLVD. SUITE 100 ARLINGTON, TEXAS 76006 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS JANUARY 23, 1997 To Each Stockholder of D.R. Horton, Inc.: You are invited to attend the 1997 Annual Meeting of Stockholders of D.R. Horton, Inc. (the "Company"), which will be held at the Company's corporate offices, 1901 Ascension Blvd., Suite 100, Arlington, Texas, on Thursday, January 23, 1997, at 9:30 a.m., Central time, for the following purposes: 1. To elect nine directors to serve until the next annual meeting of the stockholders and until their successors have been elected and qualified. 2. To transact such other business as may properly be brought before the meeting or any adjournment thereof. Only stockholders of record at the close of business on December 4, 1996, are entitled to notice of, and to vote at, the meeting. A list of such stockholders will be available for examination by any stockholder at the offices of the Company set forth above for at least ten days before the meeting. By Order of the Board of Directors, John M. Saganich Secretary Arlington, Texas December 20, 1996 IN ORDER TO ENSURE YOUR REPRESENTATION, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOUR PROXY WILL NOT BE USED. D.R. HORTON, INC. 1901 ASCENSION BLVD. SUITE 100 ARLINGTON, TEXAS 76006 PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS JANUARY 23, 1997 GENERAL This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of D.R. Horton, Inc., a Delaware corporation (the "Company"), for the 1997 Annual Meeting of Stockholders of the Company to be held on Thursday, January 23, 1997, at 9:30 a.m., Central time, at the Company's corporate offices, 1901 Ascension Blvd., Suite 100, Arlington, Texas, and any adjournment thereof (the "Annual Meeting"). The purposes of the Annual Meeting are set forth in the Notice of Annual Meeting of Stockholders to which this Proxy Statement is attached. The Company expects that this Proxy Statement and the accompanying form of proxy will first be mailed to each stockholder of record on or about December 20, 1996. The cost of this solicitation will be paid by the Company. The solicitation of proxies will be made primarily by use of the mails. In addition, directors, officers and regular employees of the Company may make solicitations by telephone, telegraph or personal interview, and may request banks, brokers, fiduciaries and other persons holding stock in their names, or in the names of their nominees, to forward proxies and proxy materials to their principals and obtain authorization for the execution and return of such proxies to management. The Company will reimburse such banks, brokers and fiduciaries for their out-of-pocket expenses in connection therewith. A proxy for use at the Annual Meeting is enclosed. Any proxy given may be revoked by a stockholder at any time before it is exercised by filing with the Company a notice in writing revoking it or by duly executing a proxy bearing a later date. Proxies also may be revoked by any stockholder present at the Annual Meeting who expresses a desire to vote his or her shares in person. Subject to such revocation and except as otherwise stated herein or in the form of proxy, all proxies duly executed and received prior to, or at the time of, the Annual Meeting will be voted in accordance with the specifications of the proxies. If no specification is made, proxies will be voted for the nominees for election of directors set forth elsewhere herein (see "ELECTION OF DIRECTORS") and at the discretion of the proxyholders on all other matters that may properly be brought before the Annual Meeting or any adjournment thereof. OUTSTANDING SHARES AND VOTING RIGHTS There were 32,362,036 shares of the Company's Common Stock, $.01 par value (the "Common Stock"), issued and outstanding on December 4, 1996, which has been set as the record date for the purpose of determining stockholders entitled to notice of, and to vote at, the Annual Meeting. On any matter submitted to a stockholder vote, each holder of Common Stock will be entitled to one vote, in person or by proxy, for each share of Common Stock registered in his or her name on the books of the Company as of the record date. Under Delaware law and the Company's Bylaws, with respect to any matter other than the election of directors, the aggregate number of votes entitled to be cast by all stockholders present in person or represented by proxy at the Annual Meeting, whether those stockholders vote for, against or abstain from voting on any matter, will be counted for purposes of determining whether a quorum exists, and the total number of votes cast for each of these matters will be counted for purposes of determining whether sufficient affirmative votes have been cast. The Company's Bylaws provide that the holders of a majority of the issued and outstanding shares of Common Stock, present in person or represented by proxy, shall constitute a quorum. An abstention from voting on a matter other than the election of directors by a stockholder present in person or represented by proxy at the Annual Meeting will have the same legal effect as a vote against the matter, and broker non-votes will have no effect with respect to the matter. ELECTION OF DIRECTORS Pursuant to the Bylaws of the Company, the Board of Directors has fixed the number of directors at nine and nominated the persons set forth below for election as directors of the Company at the Annual Meeting. All of the nominees are currently serving as directors of the Company. Unless otherwise specified in the accompanying proxy, the shares voted pursuant thereto will be voted for each of the persons named below as nominees for election as directors. The nominees receiving a plurality of the votes cast will be elected to serve until the next annual meeting of stockholders and their successors have been elected and qualified. If any nominee is unable to serve, the proxies will be voted by the proxyholders in their discretion for another person. The Board of Directors has no reason to believe that any nominee named will not be able to serve as a director for his or her prescribed term. According to the Bylaws of the Company, any stockholder may make nominations for the election of directors if notice of such nominations is delivered to, or mailed and received at, the principal executive office of the Company not less than thirty calendar days prior to the date of the originally scheduled meeting; provided, however, that, if less than forty calendar days' notice or prior public disclosure of the date of the meeting is given or made by the Company, notice of such nomination must be so received not later than the close of business on the tenth calendar day following the earlier of the day on which notice of the meeting was mailed or the day on which such public disclosure was made. If nominations are not so made, only the nominations of the Board of Directors may be voted upon at the Annual Meeting. The following is a summary of certain information regarding the nominees for election as directors.
DIRECTOR NAME AGE SINCE PRINCIPAL OCCUPATION - ---- --- --------- -------------------- Donald R. Horton.......... 46 1991 Mr. Horton was elected Chairman of the Board and President of the Company in July 1991. He has been involved in the real estate and homebuilding industries since 1972, and was the sole or principal shareholder, director and President of each of the Company's predecessor companies since their respective organization, which date from 1978 to 1990. Donald R. Horton is the brother of Terrill J. Horton and the nephew of Richard L. Horton. Richard Beckwitt.......... 37 1993 Mr. Beckwitt joined the Company as an Executive Vice President in March 1993 and was elected director of the Company in July 1993. Since July 1996, Mr. Beckwitt has been President of the Company's Investments Division. From 1986 to 1993, he worked in the Mergers and Acquisitions and Corporate Finance Departments at Lehman Brothers Inc., specializing in the homebuilding and building products industries. Mr. Beckwitt graduated with honors from Claremont McKenna College with a Bachelor of Arts Degree. Richard I. Galland........ 80 1992 Mr. Galland was elected director of the Company in June 1992. He was formerly the Chief Executive Officer and Chairman of the Board of Fina, Inc., a director of First Republic Bank Corporation and Of Counsel to the law firm of Jones, Day, Reavis & Pogue. Mr. Galland is currently serving as a director of Texas Industries, Inc. and Associated Materials, Inc.
2
DIRECTOR NAME AGE SINCE PRINCIPAL OCCUPATION ---- --- --------- -------------------- Richard L. Horton....... 53 1992 Mr. Horton was elected director of the Company in March 1992. He has been Vice President in charge of the Company's Dallas-Fort Worth East Division since May 1985. Richard L. Horton is the uncle of Donald R. Horton and Terrill J. Horton. Terrill J. Horton....... 48 1992 Mr. Horton was elected director of the Company in March 1992. Since September 1981, he has been Vice President in charge of one of the two former sales divisions that now form the Company's Dallas-Fort Worth North Division. Mr. Horton holds a Pharmaceutical Doctorate Degree from the University of Oklahoma School of Pharmacy. Terrill J. Horton is the brother of Donald R. Horton and the nephew of Richard L. Horton. David J. Keller......... 48 1991 Mr. Keller was elected director of the Company in September 1991 and has been Executive Vice President, Treasurer and Chief Financial Officer of the Company since June 1991. Prior thereto, he was affiliated for 21 years with Ernst & Young LLP, independent auditors, and its predecessors, serving as an audit partner from 1983 to 1991. Mr. Keller holds a Bachelor of Science Degree in Accounting from the University of Notre Dame. Francine I. Neff........ 71 1992 Ms. Neff was elected director of the Company in June 1992. Since 1979, she has been Vice President of NETS, Inc., a privately-owned investment company. Ms. Neff was formerly Treasurer of the United States and is currently serving as a director of Louisiana-Pacific Corporation. Scott J. Stone.......... 45 1992 Mr. Stone was elected director of the Company in March 1992. He has been Vice President of various of the Company's divisions since 1988, and was elected Vice President--Eastern Region of the Company in August 1994. Since October 1996, Mr. Stone has acted as a consultant to the Company. Mr. Stone holds an Associate of Arts Degree from Miami University of Ohio. Donald J. Tomnitz....... 48 1995 Mr. Tomnitz was elected director of the Company in November 1995. He has been Vice President of various of the Company's divisions since 1983, and was elected Vice President--Western Region of the Company in August 1994. Since July 1996, Mr. Tomnitz has been President of the Company's Homebuilding Division. Mr. Tomnitz previously was a Vice President of RepublicBank of Dallas, N.A., and a Vice President of Crow Development Company, a Trammell Crow Company. Mr. Tomnitz holds a Bachelor of Arts Degree in Economics from Westminster College and a Masters in Business Administration Degree in Finance from Western Illinois University.
3 In July 1994, Mr. Donald R. Horton entered into a consent order that settled an investigation by the Federal Reserve Board into whether he failed to comply with certain regulatory disclosure or other obligations relating to the acquisition and financings of his controlling interest in Provident Bancorp of Texas, Inc., a single bank holding company (together with its bank, "Provident"). Mr. Horton denied non-compliance. In the consent order, which was entered without any findings of fact or law, Mr. Horton agreed to pay a civil money penalty of $100,000 and contribute $500,000 deemed restitution as part of a capital infusion of up to $7.0 million in Provident. The capital infusion was made through an approved voting trust in order to address Provident's financial difficulties, which predated his acquisition. In the consent order, Mr. Horton also agreed not to participate, apart from the capital infusion, in the affairs of insured depository institutions or their holding companies, without prior regulatory approval, or to violate laws applicable thereto. Mr. Horton advised the Company that his agreements in the consent order were intended to avoid the expense and delay required for further proceedings and to protect his investment by improving Provident's regulatory capital. He also advised the Company that in making a personal investment in Provident, he obtained the financial review of a national accounting firm and the advice of a national law firm as to regulatory matters. In addition, Mr. Horton informed the Company that he filed suit against the law firm that represented him in the Provident acquisition in connection with such representation. Mr. Horton subsequently informed the Company that the litigation against the law firm had been satisfactorily resolved and that he sold his interest in Provident. On November 14, 1996, Mr. Beckwitt settled an investigation by the Securities and Exchange Commission in connection with his purchase of stock of an unaffiliated corporation in September 1994. Without admitting or denying the allegations, Mr. Beckwitt consented to a final judgment announced that day enjoining him from violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and rules 10b-5 and 14e-3 thereunder, and providing for his payment of the alleged profit and a civil penalty. Mr. Beckwitt advised the Company that he believes it was in his best interest to resolve the matter without litigation as it would avoid additional cost and distraction. 4 BENEFICIAL OWNERSHIP OF COMMON STOCK The following table sets forth certain information regarding the beneficial ownership of the Company's Common Stock as of December 4, 1996 by (i) all persons who are beneficial owners of greater than 5% of the Common Stock, (ii) all directors and nominees of the Company, (iii) all named executive officers of the Company, and (iv) all directors and executive officers of the Company as a group. Unless stated otherwise, the named beneficial owners possess sole voting and investment power with respect to the shares set forth in the table.
NAME OF BENEFICIAL OWNER NUMBER PERCENT ------------------------ ---------------- ------------- SHARES BENEFICIALLY OWNED ------------------------------- Donald R. Horton........................... 6,763,060(1) 20.90% Richard Beckwitt........................... 72,321(2) * Richard I. Galland......................... 915 * Terrill J. Horton.......................... 6,852,744(3) 21.18% Richard L. Horton.......................... 762,806 2.36% David J. Keller............................ 128,680(4) * Francine I. Neff........................... 363 * Scott J. Stone............................. 388,263 1.20% Donald J. Tomnitz.......................... 89,108(5) * All directors and named executive officers as a group (9 persons).................... 15,058,260(6) 46.13%
- -------- *Less than 1%. (1) These shares of Common Stock include an aggregate of 478,579 shares owned by Mr. Horton's children. Mr. Horton's address is D.R. Horton, Inc., 1901 Ascension Blvd., Suite 100, Arlington, Texas 76006. (2) These shares of Common Stock represent shares issuable upon the exercise of outstanding stock options. (3) These shares of Common Stock include an aggregate of 5,763,898 shares, consisting of 413,254 shares of Common Stock owned of record by the Donald Ray Horton Trust, 376,893 shares of Common Stock owned of record by the Martha Elizabeth Horton Trust, 2,069,702 shares of Common Stock owned of record by the Donald Ray Horton Trust Number Two, 953,811 shares of Common Stock owned of record by the Martha Elizabeth Horton Trust Number Two and 975,119 shares of Common Stock owned of record by each of the Donald Ryan Horton Trust and the Douglas Reagan Horton Trust. Mr. Horton serves as the sole trustee for each of the foregoing trusts. These shares of Common Stock also include 9,159 shares owned by Mr. Horton's son. Mr. Horton's address is D.R. Horton, Inc., 1901 Ascension Blvd., Suite 100, Arlington, Texas 76006. (4) These shares of Common Stock include 4,718 shares held by Mr. Keller for the benefit of his children and 123,962 shares issuable upon the exercise of outstanding stock options. (5) These shares of Common Stock include 81,774 shares issuable upon the exercise of outstanding stock options. (6) These shares of Common Stock include all shares of Common Stock owned or controlled by Terrill J. Horton, including those owned by the trusts and Mr. Horton's children as set forth in note 3 above, all shares of Common Stock owned or controlled by David J. Keller, including those shares held on behalf of Mr. Keller's children as set forth in note 4 above, and 278,057 shares of Common Stock issuable upon the exercise of outstanding stock options held by Richard Beckwitt, David J. Keller and Donald J. Tomnitz. 5 EXECUTIVE COMPENSATION The following tables set forth, with respect to the President and the other executive officers of the Company, all plan and non-plan compensation awarded, earned or paid for all services rendered in all capacities to the Company and its subsidiaries during the periods indicated. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ANNUAL ----------------------------- COMPENSATION AWARDS PAYOUTS ------------- ------------------- ------- OTHER RESTRICTED NAME AND ANNUAL STOCK OPTIONS/ LTIP ALL OTHER PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS SARS PAYOUTS COMPENSATION - ------------------ ---- -------- -------- ------------ ---------- -------- ------- ------------ Donald R. Horton 1996 $235,000 $165,283 -- -- -- -- $30,515(5) Chairman of Board 1995 235,000 138,650 -- -- -- -- 26,725(6) and President 1994 225,000 117,457 -- -- -- -- 27,000(7) Richard Beckwitt 1996 $185,000 $110,000 -- -- 10,000 -- $24,825(5) EVP and Director 1995 185,000 109,150 -- -- 30,240(1) -- 24,144(6) 1994 150,000 75,000 -- -- -- -- 15,000(7) David J. Keller 1996 $185,000 $120,000 -- -- 41,200(2) -- $24,968(5) EVP, Treasurer and 1995 185,000 109,150 -- -- 39,841(3) -- 23,714(6) CFO and Director 1994 175,000 87,500 -- -- 24,721(4) -- 22,000(7)
- -------- (1) The number of shares has been adjusted pursuant to the antidilution provisions of the D.R. Horton, Inc. 1991 Incentive Plan (the "Incentive Plan") to reflect the effects of a seven-for-five stock split effected as a 40 percent stock dividend paid by the Company on September 16, 1995 (the "40 Percent Stock Dividend") and an eight percent stock dividend paid by the Company on June 30, 1996 (the "8 Percent Stock Dividend"). (2) The number of shares represents a stock option grant originally made in respect of 15,000 shares of Common Stock, adjusted pursuant to the antidilution provisions of the Incentive Plan to reflect the effects of the 8 Percent Stock Dividend, and a stock option grant made in respect of 25,000 shares of Common Stock. (3) The number of shares represents a stock option grant originally made in respect of 15,000 shares of Common Stock, adjusted pursuant to the antidilution provisions of the Incentive Plan to reflect the effects of a nine percent stock dividend paid by the Company on June 30, 1995 (the "9 Percent Stock Dividend"), the 40 Percent Stock Dividend and the 8 Percent Stock Dividend (collectively, the "Dividends"), and a stock option grant originally made in respect of 10,000 shares of Common Stock, adjusted pursuant to the antidilution provisions of the Incentive Plan to reflect the effects of the 40 Percent Stock Dividend and the 8 Percent Stock Dividend. (4) The number of shares has been adjusted pursuant to the antidilution provisions of the Incentive Plan to reflect the effects of the Dividends. (5) These amounts represent (a) credits made by the Company of $23,500, $18,500 and $18,500 to the accounts of Messrs. Horton, Beckwitt and Keller, respectively, under the D.R. Horton, Inc. Supplemental Executive Retirement Plan No. 2 ("SERP 2"), (b) the above-market portion of earnings on credits made by the Company of $2,515, $1,825, and $1,968 to the accounts of Messrs. Horton, Beckwitt and Keller, respectively, under SERP 2, and (c) matching contributions by the Company of $4,500 to the accounts of each of Messrs. Horton, Beckwitt and Keller under the D.R. Horton, Inc. Profit Sharing Plus Plan (the "401(k) Plan"). (6) These amounts represent (a) credits made by the Company of $23,500, $18,500 and $18,500 to the accounts of Messrs. Horton, Beckwitt and Keller, respectively, under SERP 2, (b) the above-market portion of earnings on credits made by the Company of $1,098, $732 and $854 to the accounts of Messrs. Horton, Beckwitt and Keller, respectively, under SERP 2, and (c) matching contributions by the Company of $2,127, $4,912 and $4,360 to the accounts of Messrs. Horton, Beckwitt and Keller, respectively, under the 401(k) Plan. (7) These amounts represent (a) credits made by the Company of $22,500, $15,000 and $17,500 to the accounts of Messrs. Horton, Beckwitt and Keller, respectively, under SERP 2 and (b) matching contributions by the Company of $4,500 to the accounts of each of Messrs. Horton and Keller under the 401(k) Plan. 6 OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION FOR OPTION INDIVIDUAL GRANTS TERM ------------------------------ ------------------------ % OF TOTAL OPTIONS/SARS GRANTED TO OPTIONS/SARS EMPLOYEES IN EXERCISE OR EXPIRATION NAME GRANTED FISCAL YEAR BASE PRICE DATE 5% 10% - ---- ------------- ------------- ------------ ----------- ----------- ------------ Richard Beckwitt........ 10,000(1) 1.79% $ 9.625 07-18-06 $ 60,531 $ 153,398 David J. Keller......... 16,200(2)(3) 2.68% $10.185(2) 11-16-05 $ 103,766 $ 262,963 25,000(4) 4.47% $ 9.625 07-18-06 $ 151,328 $ 383,495
- -------- (1) These shares are covered by a non-qualified stock option granted under the Incentive Plan that becomes exercisable with respect to 1,000 of such shares on each of the first nine anniversaries of July 18, 1996, and with respect to 1,000 of such shares on April 18, 2006. (2) The number of shares has been adjusted pursuant to the antidilution provisions of the Incentive Plan to reflect the effects of the 8 Percent Stock Dividend. (3) These shares are covered by a non-qualified stock option granted under the Incentive Plan that becomes exercisable with respect to 1,620 of such shares on each of the first nine anniversaries of November 16, 1995, and with respect to 1,620 of such shares on August 16, 2005. (4) These shares are covered by a non-qualified stock option granted under the Incentive Plan that becomes exercisable with respect to 2,500 of such shares on each of the first nine anniversaries of July 18, 1996, and with respect to 2,500 of such shares on April 18, 2006. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION/SAR VALUES
VALUE OF UNEXERCISED NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS/SARS AT OPTIONS/SARS FISCAL YEAR-END AT FISCAL YEAR-END SHARES ACQUIRED ON EXERCISABLE/ EXERCISABLE/ NAME EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE - ---- ------------------ -------------- --------------------- -------------------- Richard Beckwitt........ 13,750 $ 48,249 72,312/294,021(1) $260,107/965,296(1) David J. Keller......... 40,775 $332,101 71,261/172,960(1) $475,994/445,686(1)
- -------- (1)Adjusted pursuant to the antidilution provisions of the Incentive Plan to reflect the effects of the Dividends. COMPENSATION OF DIRECTORS Each non-employee director of the Company receives a fee of $25,000 per year for all services performed as a director, and reimbursement for all expenses incurred to attend Board and committee meetings. No additional fees are paid for participation on any committee of the Board. No director of the Company who is also an employee of the Company receives any additional compensation for serving as a director of the Company. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During fiscal 1996, the Company's Compensation Committee was composed of Messrs. Donald R. Horton, Richard Beckwitt, David J. Keller and Richard I. Galland. Mr. Horton was the Chairman of the Board and President of the Company, Mr. Beckwitt was Executive Vice President of the Company and Mr. Keller was Executive Vice President, Treasurer and Chief Financial Officer of the Company during fiscal 1996. 7 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION General. The Company has undertaken to formulate a fair and competitive compensation policy for executive officers that will attract, motivate and retain highly experienced, qualified and productive personnel, reward superior performance and provide long-term incentives that are based on performance. The Company also has attempted to develop an executive compensation policy that will serve to align the interests of the Company, its executive officers and its stockholders. The primary components of executive compensation consist of base salaries, a performance-based cash bonus plan, participation in the D.R. Horton, Inc. Supplemental Executive Retirement Plan No. 1 ("SERP 1") and SERP 2 (collectively, the "SERPs") and stock options. The Company has undertaken through its current executive compensation policy to make a substantial portion of the compensation an executive officer has the opportunity to earn consist of bonus and stock option incentives. Base Salaries. Base salaries for the Company's executive officers for the 1996 fiscal year were established by the Compensation Committee and approved by the Board of Directors. Factors considered were generally subjective and include (i) the recommendation of the Chairman of the Board and President, (ii) the contribution the executive officer made and is anticipated to make to the success of the Company, (iii) the level of experience and responsibility of the executive officer and (iv) the Company's historical levels of compensation for executive officers. No quantitative relative weights were assigned to any of these factors. Bonus Plan. The 1996 Compensation Plan for Executive Officers (the "Bonus Plan") was established by the Compensation Committee and approved by the Board of Directors. The Bonus Plan provided each of the Company's executive officers the opportunity to earn up to 100% of his 1996 annual base salary at the discretion of the Chairman of the Board and President and as approved by the Compensation Committee. Participants in the Bonus Plan earned bonuses ranging from 59% to 70% of the respective amounts they were eligible to earn pursuant to the Bonus Plan. SERPs. The SERPs were adopted by the Company in 1994 to permit eligible participants, which include executive officers, regional vice presidents and division managers, to defer income and establish a source of funds payable upon retirement, death or disability. Individual agreements under the SERPs were adopted and approved by the Compensation Committee and ratified by the Board of Directors. SERP 1 permits participants voluntarily to defer receipt of income from the Company. Amounts deferred are invested on behalf of the participant in investment vehicles selected from time to time by the administrators of SERP 1. Pursuant to SERP 2, the Company has established a liability to each participant equal to 10% of the participant's 1996 base salary. Earnings on this liability accrue at a rate established from time to time by the administrators of SERP 2. Chairman of the Board and President's 1996 Compensation. Donald R. Horton's compensation for the Company's 1996 fiscal year consisted of an annual base salary of $235,000 and participation in the Bonus Plan and the SERPs. This base salary and bonus arrangement were made on the basis of the Company's executive compensation policy and the factors described above. COMPENSATION COMMITTEE
Donald R. Horton Richard Beckwitt Richard I. Galland David J. Keller
Stock Option Grants. Grants of stock options under the Incentive Plan are administered by the Audit Committee. The Company believes that stock options provide an important long-term incentive to executive officers and align the interests of the Company, its executive officers and its stockholders by creating a direct link between executive compensation and long-term Company performance. The stock options granted in fiscal 1996 have an exercise price of not less than the fair market value of the Common Stock on the date of grant and a vesting schedule that extends over nine years. All other terms of stock option grants are established by the Audit Committee, subject to the limitations of the Incentive Plan. 8 A total of three stock option grants were made to two executive officers in fiscal 1996. In determining the number of shares of Common Stock covered by and the vesting schedule of each stock option grant, the Audit Committee considered (i) the recommendations of the Chairman of the Board and President, (ii) the contribution the executive officer made and is anticipated to make to the success of the Company, (iii) the level of experience and responsibility of the executive officer, (iv) the number of stock options that previously had been granted to the executive officer pursuant to the Incentive Plan and (v) the number of stock options granted to other participants in the Incentive Plan. No quantitative relative weights were assigned to any of these factors. AUDIT COMMITTEE Richard I. Galland Francine I. Neff 9 STOCK PERFORMANCE The following graph illustrates the cumulative total stockholder return on the Company's Common Stock from June 5, 1992, the date the Common Stock was registered under the Securities Exchange Act of 1934 (the "Exchange Act"), through September 30, 1996, assuming a hypothetical investment of $100 and a reinvestment of all dividends paid on such an investment, compared to the Standard and Poor's 500 Stock Index and a Peer Group Index described below for the same period. [GRAPH APPEARS HERE] - -------------------------------------------------------------------------------
6-5-92 12-31-92 9-30-93 9-30-94 9-30-95 9-30-96 - --------------------------------------------------------------------- D. R. Horton, Inc. $100.00 $ 88.61 $150.29 $127.69 $165.93 $162.53 - --------------------------------------------------------------------- S&P 500 $100.00 $101.62 $114.83 $119.06 $154.48 $185.89 - --------------------------------------------------------------------- Peer Group $100.00 $ 96.89 $146.25 $ 98.90 $113.39 $107.49
- ------------------------------------------------------------------------------- (1)From June 12, 1992, through December 13, 1995, the Company's Common Stock was traded on the Nasdaq National Market. On and after December 14, 1995, the Company's Common Stock was traded on the New York Stock Exchange. Accordingly, the Company has substituted the Standard and Poors 500 Stock Index for the NASDAQ U.S. Stock Index, the broad equity market index previously used by the Company for purposes of this performance graph. (2)The Peer Group Index includes the stock performance of the following homebuilders: Calton, Inc., Centex Corporation, Continental Homes Holding Corp., Engle Homes, Inc., Hovnanian Enterprises, Inc., Kaufman and Broad Home Corporation, Lennar Corporation, PHM Corporation, The Presley Companies, The Ryland Group, Inc., Schuler Homes, Inc., Standard Pacific Corp., Toll Brothers, Inc. and UDC Homes, Inc. This group of companies is broader than the Standard & Poor's Index of Homebuilders, which consists of only three companies, and the Company believes its Peer Group Index, comprised of companies with similar operations, is more indicative of the overall performance of the industry as a whole. 10 TRANSACTIONS WITH MANAGEMENT The Company has agreed to indemnify each of its directors and executive officers to provide them with the maximum indemnification allowed under its certificate of incorporation and applicable law with respect to the Company and certain corporations previously engaged in the homebuilding business as D.R. Horton Custom Homes that were not merged into the Company at the time of its reorganization in December 1991. MEETINGS AND COMMITTEES OF THE BOARD The Board of Directors has appointed three standing committees: an Executive Committee, a Compensation Committee and an Audit Committee. The Executive Committee, between meetings of the Board and while the Board is not in session, possesses all the powers and may carry out all the duties of the Board of Directors in the management of the business of the Company, which by law may be delegated to it by the Board of Directors. The Executive Committee acted 44 times by written consent during fiscal 1996. The Executive Committee is currently composed of Messrs. Donald Horton, Beckwitt and Keller. The Compensation Committee is empowered to (i) recommend to the Board the compensation to be paid to the executive officers of the Company and its subsidiaries and other affiliates, (ii) investigate and recommend to the Board employee benefit plans deemed appropriate for the employees of the Company and its subsidiaries and other affiliates, (iii) supervise the administration of any such employee benefit plans adopted by the Company and its subsidiaries and other affiliates (other than the Incentive Plan) and (iv) perform such other functions and undertake such investigations as the Board shall from time to time direct. The Compensation Committee met once during fiscal 1996. The Compensation Committee is currently composed of Messrs. Galland, Donald Horton, Beckwitt and Keller. The Audit Committee is empowered to (i) meet with the independent auditors of the Company and review the scope of their annual audit, any open questions as to the choice of acceptable accounting principles to be applied and all other matters relating to the auditors' relationship with the Company, (ii) advise and assist the Board in evaluating the auditors' performance, including the scope and adequacy of the auditors' examination, (iii) recommend the firm of independent auditors to be employed by the Board, (iv) review the Company's annual financial statements and discuss such statements with the auditors, (v) receive and consider the auditors' comments and suggestions as to the internal control procedures, adequacy of staff and other matters, (vi) administer the Incentive Plan, (vii) perform such other functions and undertake such investigations relating to the operations or financial and accounting aspects of the Company as the Board shall direct, and (viii) retain and consult with counsel or such other experts as the Committee shall consider necessary or desirable in connection with the performance of its duties. The Audit Committee met twice and acted once by written consent during fiscal 1996. The Audit Committee is currently composed of Mr. Galland and Ms. Neff. During fiscal 1996, the Board of Directors held four meetings. No director attended fewer than 75 percent of the number of meetings of the Board and of the committees on which he or she served during fiscal 1996, other than Mr. Galland. INDEPENDENT PUBLIC ACCOUNTANTS Ernst & Young LLP served as the Company's independent certified public accountants for the fiscal year ended September 30, 1996. A representative of Ernst & Young LLP is expected to be present at the Annual Meeting and will have an opportunity to make a statement and to respond to appropriate questions from stockholders. 11 STOCKHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING Any stockholder who intends to present a proposal for action at the Company's 1998 Annual Meeting of Stockholders and to have the Company include such proposal in its proxy soliciting materials pursuant to Rule 14a-8 under the Exchange Act must deliver a copy of the proposal to the Company not later than August 15, 1997. In addition, the Bylaws of the Company provide that only stockholder proposals submitted in a timely manner to the Secretary of the Company may be acted upon at an annual meeting of stockholders. To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of the Company not less than 30 calendar days prior to the date of the originally scheduled meeting; provided, however, that, if less than 40 calendar days' notice or prior public disclosure of the date of the scheduled meeting is given or made by the Company, notice by the stockholder to be timely must be so received not later than the close of business on the tenth calendar day following the earlier of the day on which such notice of the date of the scheduled meeting was mailed or the day on which such public disclosure was made. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires the Company's directors, certain of its officers and persons who own more than 10 percent of a registered class of the Company's equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the "SEC"). Officers, directors and greater than 10 percent stockholders are required by SEC regulations to furnish the Company with copies of all forms they file pursuant to Section 16(a). Based solely on its review of the copies of such forms received by it, the Company believes that during the year ended September 30, 1996, all filing requirements applicable to its officers, directors and greater than 10 percent beneficial owners were complied with, other than with respect to Mr. Donald R. Horton, who filed one late report on Form 4 relating to one transaction. OTHER MATTERS Management knows of no other matters to be voted upon at the Annual Meeting. If any other matter is properly brought before the Annual Meeting, it is the intention of the persons named in the form of proxy to vote in their discretion upon such matters in accordance with their judgment. You are urged to sign, date and return the enclosed proxy in the envelope provided. No postage is required if the envelope is mailed from within the United States. If you subsequently decide to attend the Annual Meeting and wish to vote your shares in person, you may do so. Your cooperation in giving this matter your prompt attention is appreciated. By Order of the Board of Directors, John M. Saganich Secretary Arlington, Texas December 20, 1996 12 PROXY D.R. HORTON, INC. 1901 ASCENSION BLVD., SUITE 100, ARLINGTON, TEXAS 76006 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby nominates, constitutes and appoints Donald R. Horton, Richard Beckwitt and David J. Keller, and each of them, attorneys, agents and proxies of the undersigned, with full power of substitution to each and hereby authorizes them to represent and to vote as designated below, all shares of Common Stock of D.R. Horton, Inc. (the "Company") held of record by the undersigned at the close of business on December 4, 1996 at the Annual Meeting of Stockholders to be held on January 23, 1997 or any adjournment thereof. 1. ELECTION FOR all nominees listed WITHHOLD AUTHORITY to OF below vote DIRECTORS (except as marked to the for all nominees listed contrary below) [_] below [_] Donald R. Horton, Richard Beckwitt, Richard I. Galland, Richard L. Horton, Terrill J. Horton, David J. Keller, Francine I. Neff, Scott J. Stone and Donald J. Tomnitz (INSTRUCTION: To withhold authority to vote for any individual nominee write that nominee's name in the space provided below.) 2. In their discretion, the proxies are authorized to vote upon such other business as may properly be brought before the meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL. PLEASE SIGN AND DATE ON REVERSE SIDE. The undersigned hereby ratifies and confirms all that said attorneys and proxies, or any of them, or their substitutes, shall lawfully do or cause to be done by virtue hereof, and hereby revokes any and all proxies heretofore given by the undersigned to vote at said meeting. The undersigned acknowledges receipt of the notice of said annual meeting and the proxy statement accompanying said notice. Dated: 199 --------------- -- --------------------------------- (Signature) --------------------------------- (Signature) Please sign exactly as names appear herein. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full titles as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----