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: July 12, 2007
(Date of earliest event reported)
KB HOME
(Exact name of registrant as specified in charter)
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Delaware
(State or other jurisdiction of
incorporation)
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1-9195
(Commision File Number)
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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(e) Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers
On July 12, 2007, the Management Development and Compensation Committee (the “Committee”) of the
Board of Directors of KB Home (the “Company”) granted the equity awards called for by the
Employment Agreement between the Company and its President and Chief Executive Officer, and
approved two new types of incentive compensation awards: cash-settled Stock Appreciation Rights
(“SARs”) and cash-settled Phantom Shares.
The SARs and Phantom Shares do not entitle recipients to receive any shares of the Company’s common
stock and do not provide recipients with any voting or other stockholder rights. However, because
the value of each SAR and Phantom Share is tied to the price of the Company’s common stock, the
Company believes they align employee and stockholder interests and provide retention benefits akin
to stock option and restricted stock awards. At the same time, these cash-settled awards conserve
the number of shares the Company has available for future equity compensation grants and limit
stockholder dilution. The Committee’s actions of July 12, 2007, which include the Company’s first
long-term incentive compensation grants to employees since October 2005, are described below:
CEO Employment Agreement Awards. In accordance with the terms of his Employment Agreement
with the Company, dated as of February 28, 2007, the Committee granted to the Company’s President
and Chief Executive Officer (i) 54,000 performance-vesting restricted shares of the Company’s
common stock, which vest based on the Company’s stock
performance over a three-year period relative to its peer companies,
(ii) options to purchase 325,050 shares of the Company’s common stock in connection with his
promotion to his current position, which vest in equal installments on December 1, 2007, December
1, 2008 and December 1, 2009, and (iii) options to purchase an additional 325,050 shares of the
Company’s common stock as his annual incentive award for fiscal year 2007, which vest in equal
installments on July 12, 2008, July 12, 2009 and
July 12, 2010. The exercise price of all of these
options is $36.19, which was the closing price of the Company’s common stock on the New York Stock
Exchange on July 12, 2007, the date of the Committee meeting at which the grants were made. The
Employment Agreement was attached as an exhibit to the Company’s Current Report on Form 8-K filed
with the Securities and Exchange Commission (“SEC”) on March 6, 2007.
Phantom Shares. The Committee approved grants of Phantom Shares to named executive officers
and certain other managers and employees of the Company, including the President and Chief
Executive Officer, in payment of fiscal year 2006 annual incentive compensation that exceeded the
recipients’ respective annual cash compensation limits that were set at the beginning of fiscal
year 2006. These Phantom Shares were granted in lieu of the shares of restricted Company common
stock that were indicated in the Company’s definitive 2007 Proxy Statement, filed with the SEC on
March 5, 2007, in large part to conserve the number of shares the Company has available for future
equity compensation grants. The Committee also approved the award of Phantom Shares as part of the
fiscal year 2007 long-term incentive awards to named executive officers and certain other managers
and employees of the Company, not including the President and Chief Executive Officer.
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 July 12, 2007 vests in
full three years after that date. However, the Phantom Shares granted to certain senior managers
of the Company as fiscal year 2007 long-term incentive awards will not vest unless a performance
goal related to the Company’s cash flow is achieved.
Stock Appreciation Rights. The Committee approved the award of SARs as part of the fiscal
year 2007 long-term incentive awards to named executive officers and a limited number of other
senior managers of the Company, not including the President and Chief Executive Officer.
Each SAR, once vested, entitles a recipient to receive a cash payment equal to the spread
between its exercise price and the fair market value of one share of the Company’s common stock on
the date of exercise, up to a maximum amount of four times the exercise price. The exercise price
for the SARs granted on July 12, 2007 is $36.19, but a SAR recipient does not actually pay the
exercise price to exercise a SAR. Each SAR granted on July 12, 2007 has a ten-year term from the
date of grant and vests in equal annual installments over a three-year period. However, the SARs
will not vest unless the performance goal related to the Company’s cash flow is achieved.