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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant þ |
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Filed by a Party other than the Registrant
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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þ Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
D.R. Horton, Inc.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11. |
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1) Title of each class of securities to which transaction applies: |
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2) Aggregate number of securities to which transaction applies: |
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On
Thursday, January 25, 2007
Dear Fellow Stockholder of D.R. Horton:
You are invited to attend the 2007 Annual Meeting of
Stockholders of D.R. Horton, Americas
Builder. Our 2007 Annual Meeting will be held at
our corporate offices located at: D.R. Horton Tower, 301
Commerce Street, Fort Worth, Texas, on Thursday,
January 25, 2007, at 10:00 a.m., central time, for the
following purposes:
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To elect seven directors.
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To vote on a shareholder proposal concerning a majority vote
standard for the election of directors.
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To conduct other business properly brought before the meeting.
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Only stockholders of record at the close of business on Friday,
December 1, 2006, are entitled to notice of and to vote at
the Annual Meeting or any adjournment thereof.
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. A form of proxy on which to indicate
your vote and an envelope, postage prepaid, in which to return
your proxy are enclosed. 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 Annual Meeting, you may revoke your proxy at that time and
vote your shares in person. If you desire any additional
information concerning the 2007 Annual Meeting or the matters to
be acted upon at the meeting, we would be glad to hear from you.
Very truly yours,
DONALD R. HORTON
Chairman of the Board
Fort Worth, Texas
December 12, 2006
TABLE OF
CONTENTS
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APPENDIX
A CORPORATE GOVERNANCE
PRINCIPLES
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A-1
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APPENDIX
B AUDIT COMMITTEE CHARTER
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B-1
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i
D.R.
Horton Tower
301 Commerce Street
Fort Worth, Texas 76102
www.drhorton.com
PROXY
STATEMENT
for the
2007
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On January 25,
2007
GENERAL
Time,
Place and Purposes of Meeting
Our 2007 Annual Meeting of Stockholders will be held on
Thursday, January 25, 2007, at 10:00 a.m., central
time, at our corporate offices, located at: D.R. Horton Tower,
301 Commerce Street, Fort Worth, Texas. The purposes of the
Annual Meeting are set forth in the Notice of Annual Meeting of
Stockholders to which this Proxy Statement is attached. D.R.
Horton, Inc. is referred to as D.R. Horton,
Company, we, and our in
this Proxy Statement.
Solicitation
of Proxies
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of D.R.
Horton. D.R. Horton expects that this Proxy Statement and the
accompanying form of proxy will first be mailed to each
stockholder of record on or about December 14, 2006. The
cost of this solicitation will be paid by D.R. Horton. The
solicitation of proxies will be made primarily by use of the
mail. In addition, directors, officers and regular employees of
D.R. Horton may make solicitations without special compensation
by telephone, telegraph,
e-mail or
personal interview. They 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. D.R. Horton will reimburse
such banks, brokers and fiduciaries for their reasonable
out-of-pocket
expenses in connection therewith. We have retained The Altman
Group to solicit proxies on our behalf and will pay The Altman
Group fees we believe will not exceed $6,500 for their services.
Revocation
and Voting of Proxies
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 D.R. Horton 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 (see
Proposal One Election of Directors),
AGAINST the shareholder proposal concerning a majority vote
standard for the election of directors (see
Proposal Two Shareholder
Proposal Concerning a Majority Vote Standard for the
Election of Directors) and, at the discretion of the proxy
holders, on all other matters properly brought before the Annual
Meeting or any adjournment thereof.
Outstanding
Shares and Voting Rights
December 1, 2006 has been set as the record date for the
purpose of determining stockholders entitled to notice of, and
to vote at, the Annual Meeting. There were
313,555,125 shares of D.R. Hortons Common Stock,
$.01 par value, issued and outstanding on the record date.
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 issued and outstanding share of Common Stock
registered in his or her name on the books of D.R. Horton as of
the record date. A list of such stockholders will be available
for examination by any stockholder at the offices of D.R. Horton
set forth above for at least ten days before the Annual Meeting.
Quorum
Requirement
The D.R. Horton Bylaws provide that if the holders of a majority
of the issued and outstanding shares of Common Stock entitled to
vote are present in person or represented by proxy, there will
be a quorum. 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. Broker
non-votes, which are described below, will be considered present
for purposes of determining whether a quorum exists.
Broker
Non-Votes and Vote Required
If a broker holds your shares, this Proxy Statement and a proxy
card have been sent to the broker. You may have received this
Proxy Statement directly from your broker, together with
instructions as to how to direct the broker to vote your shares.
If you desire to have your vote counted, it is important that
you return your voting instructions to your broker. Rules of the
New York Stock Exchange (NYSE) determine
whether proposals presented at stockholder meetings are
routine or non-routine. If a
proposal is routine, a broker or other entity holding
shares for an owner in street name may vote on the proposal
without voting instructions from the owner. If a proposal is
non-routine, the broker or other entity may vote on the
proposal only if the owner has provided voting instructions. A
broker non-vote occurs when the broker or
other entity is unable to vote on a proposal because the
proposal is non-routine and the owner does not provide
instructions. Proposal One the proposal to
elect directors is a routine proposal under the rules of
the NYSE. As a result, brokers or other entities holding shares
for an owner in street name may vote on Proposal One even
if no voting instructions are provided by the owner.
Proposal Two the proposal concerning a majority
vote standard for the election of directors, is a non-routine
proposal under the rules of the NYSE. As a result, brokers
or other entities holding shares for an owner in street name may
vote on Proposal Two only if voting instructions are
provided by the owner. If you do not provide your broker with
voting instructions for Proposal Two, your shares will not
be counted as shares present with respect to the vote required
for this proposal.
The following table reflects the vote required for each proposal
and the effect of broker non-votes, withhold votes and
abstentions on the vote, assuming a quorum is present at the
meeting:
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Effect of
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Broker Non-Votes,
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Withhold Votes
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Proposal
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Vote Required
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and Abstentions
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(1) Election of Directors
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(1) The seven nominees who
receive the most votes will be elected
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(1) Broker non-votes and
withhold votes have no legal effect, subject to our recently
amended Corporate Governance Principles
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(2) Consider shareholder
proposal concerning a majority vote standard for the election of
directors
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(2) An affirmative vote of
the holders of a majority of our common stock which has voting
power present in person or represented by proxy and is entitled
to vote
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(2) Broker non-votes have no
effect; abstentions have the same effect as a vote against the
proposal
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2
If any other proposals are properly presented to the
stockholders at the meeting, the number of votes required for
approval will depend on the nature of the proposal. Generally,
under Delaware law and our Bylaws, the number of votes required
to approve a proposal is a majority of the shares of Common
Stock present and entitled to vote at the meeting. The enclosed
proxy card gives discretionary authority to the proxy holders to
vote on any matter not included in this Proxy Statement that is
properly presented to the stockholders at the meeting. The
persons named as proxies on the enclosed proxy card are Donald
R. Horton, Chairman, Donald J. Tomnitz, Vice Chairman, President
and Chief Executive Officer, and Bill W. Wheat, Executive Vice
President and Chief Financial Officer.
Stockholders
Sharing the Same Address
The broker, bank or other nominee of any stockholder who is a
beneficial owner, but not the record holder, of the
Companys Common Stock may deliver only one copy of this
Proxy Statement and our Annual Report to multiple stockholders
sharing an address, unless the broker, bank or nominee has
received contrary instructions from one or more of the
stockholders.
In addition, with respect to record holders, in some cases, only
one copy of this Proxy Statement and our Annual Report will be
delivered to multiple stockholders sharing an address, unless
the Company has received contrary instructions from one or more
of the stockholders. Upon written or oral request, the Company
will deliver free of charge a separate copy of this Proxy
Statement and our Annual Report to a stockholder at a shared
address to which a single copy was delivered. You can notify
your broker, bank or other nominee (if you are not the record
holder) or the Company (if you are the record holder) that you
wish to receive a separate copy of our proxy statements and
annual reports in the future, or alternatively, that you wish to
receive a single copy of the materials instead of multiple
copies. The Companys contact information for these
purposes is: D.R. Horton, Inc., Attention: Investor
Relations, D.R Horton Tower, 301 Commerce Street,
Suite 500, Fort Worth, Texas 76102, telephone number:
(817) 390-8200,
or e-mail:
mslapper@drhorton.com.
PROPOSAL ONE
ELECTION
OF DIRECTORS
Our Board of Directors currently consists of seven members who
will serve until the 2007 Annual Meeting, and until their
successors have been elected and qualified.
By unanimous resolution, the Nominating and Governance Committee
recommended to the Board of Directors, as nominees to the Board
of Directors, our seven current Directors of the Company, each
of whom is listed below under the caption Nominees for
Director. After review and consideration by the Board
of Directors, the Board nominated the seven Directors for
election as directors of D.R. Horton at the 2007 Annual Meeting.
Unless otherwise specified in the accompanying proxy, the shares
voted by proxy will be voted for each of the persons named below
as nominees for election as directors. The seven nominees
receiving the most votes cast, which is a plurality of the
votes, will be elected for one year terms and will 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 proxy holders in their
discretion for another person. The Board of Directors has no
reason to believe that any nominee will be unable to serve as a
director for his prescribed term.
The Corporate Governance Principles of the Company were recently
amended to address the situation in which a director does not
receive a majority of affirmative votes cast. Under a
newly-adopted guideline, any nominee for director who, in an
uncontested election, receives a greater number of votes
withheld from his or her election than votes
for his or her election at the annual meeting
(Majority Withheld Vote) will promptly tender
his or her resignation. The Nominating and Governance Committee,
which is comprised exclusively of independent directors, will
consider the resignation and recommend to the Board whether to
accept the tendered resignation. The Board will act upon the
Nominating and Governance Committees recommendation within
a reasonable period of time. The action taken by the Board will
be publicly disclosed
3
in a report filed with the Securities and Exchange Commission
and may include, without limitation, acceptance or rejection of
the tendered resignation or adoption of measures designed to
address the issues underlying the Majority Withheld Vote. The
foregoing description is qualified in its entirety by reference
to our Corporate Governance Principles, which can be found under
the Investor Relations and Corporate Governance links on our
website at www.drhorton.com. A copy of our Corporate Governance
Principles is also included as Appendix A to this
Proxy Statement.
According to our Bylaws, 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 D.R. Horton not less than thirty days prior to the
date of the originally scheduled meeting. However, if less than
forty days notice or prior public disclosure of the date
of the originally scheduled meeting is given by D.R. Horton,
notice of such nomination must be so received not later than the
close of business on the tenth day following the earlier of the
day on which notice of the originally scheduled 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 2007 Annual Meeting.
The Board
of Directors Recommends Voting FOR Each of
the Following Director Nominees.
4
Nominees
for Director
The following is a summary of certain information regarding the
nominees for election as directors.
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Principal Occupation
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Director
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and Business
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Name
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Since
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Experience
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Donald R. Horton
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56
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1991
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Mr. Horton has been Chairman of
the Board of D.R. Horton since it was formed in July 1991,
and he was President from July 1991 until November 1998. He has
been involved in the real estate and homebuilding industries
since 1972, and he was the sole or principal stockholder,
director and president of each of D.R. Hortons
predecessor companies since their respective organization, which
date from 1978 to 1990.
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Bradley S. Anderson
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45
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1998
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Mr. Anderson is a Senior Vice
President of CB Richard Ellis, Inc., an international real
estate brokerage company, and he has held various positions in
Phoenix, Arizona with its predecessor, CB Commercial Real Estate
Group, Inc., since January 1987. He served as Interim Chairman
of the Board of Continental Homes Holding Corp. from October
1997 through April 1998, when it merged into D.R. Horton,
and he became a director of D.R. Horton at that time.
Mr. Anderson has been a member of both the Audit and
Compensation Committees since 1998 and he has also been a member
of the Nominating and Governance Committee since it was formed
in November 2003.
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Michael R. Buchanan
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2003
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Mr. Buchanan has significant
commercial banking experience with several banking institutions
serving the real estate and homebuilding sectors. He retired
from commercial banking in March 2002. From March 2002 to March
2003, Mr. Buchanan was engaged as a senior advisor to Banc
of America Securities. From 1998 to March 2002,
Mr. Buchanan was a Managing Director of Bank of America, an
executive officer position in which he was head of its national
real estate banking group. From 1990 to 1998, Mr. Buchanan
was an Executive Vice President of NationsBank, which later
merged with Bank of America. Mr. Buchanan is also a member
of the board of directors and the asset committee of Wells Real
Estate Investment Trust, a publicly held, non-traded real estate
investment trust. Mr. Buchanan was appointed to the Audit
Committee in July 2003 and the Compensation Committee in January
2004 and he has also been a member of the Nominating and
Governance Committee since it was formed in November 2003.
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Richard I. Galland
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1992
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Mr. Galland is an attorney. He was
formerly the Chief Executive Officer and Chairman of the Board
of Fina, Inc. and Of Counsel to the law firm of Jones, Day,
Reavis & Pogue. Mr. Galland formerly served on the
boards of directors, and as a member of the audit and
compensation committees, of First RepublicBank Corporation,
Texas Industries, Inc. and Associated Materials, Inc., each an
NYSE listed company. He has been a director of the Company and a
member of both the Audit and Compensation Committees since 1992,
and he has also been a member of the Nominating and Governance
Committee since it was formed in November 2003.
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Principal Occupation
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Director
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and Business
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Michael W. Hewatt
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57
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2005
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Mr. Hewatt is a certified public
accountant and owner of Hewatt & Associates, CPAs, an
auditing and tax services firm. He has worked for
Hewatt & Associates or its predecessor firms since
1980. From 1971 to 1979, Mr. Hewatt worked in the tax and
audit areas at Coopers & Lybrand LLP (currently
PricewaterhouseCoopers LLP) and was an audit manager for five
years during this period. Mr. Hewatt is a member of the
American Institute of Certified Public Accountants
(AICPA), the AICPAs peer review program,
former member of the board of directors of the Texas Society of
Certified Public Accountants and former President of the Texas
Society of Certified Public Accountants
Fort Worth Chapter. Mr. Hewatt has been a director of
the Company since 2005. He is a member of the Audit,
Compensation and Nominating and Governance Committees.
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Donald J. Tomnitz
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1995
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Mr. Tomnitz is Vice Chairman,
President and Chief Executive Officer of D.R. Horton. He was a
Vice President in charge of various divisions of D.R. Horton
from 1983 until he was elected Vice President
Western Region of D.R. Horton in August 1994. From July 1996
until November 1998, Mr. Tomnitz was President of
D.R. Hortons Homebuilding Division; in January 1998
he was elected an Executive Vice President of D.R. Horton; in
November 1998 he was elected Vice Chairman and Chief Executive
Officer of D.R. Horton; and in March 2000, he became President
as well. Mr. Tomnitz previously was a Captain in the
U.S. Army, a Vice President of RepublicBank Dallas, N.A.,
and a Vice President of Crow Development Company, a Trammell
Crow company.
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Bill W. Wheat
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40
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2003
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Mr. Wheat is an Executive Vice
President and Chief Financial Officer of D.R. Horton, positions
he has held since October 2003. Mr. Wheat was a Senior
Vice President and Controller since 2000. From 1998 until
2000, Mr. Wheat was an Accounting Manager with the Company.
From 1991 to 1998, Mr. Wheat held financial planning and
assistant controller positions with The Bombay Company. Prior to
1991, Mr. Wheat was an auditor with Price Waterhouse LLP
(currently PricewaterhouseCoopers LLP).
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Other
Executive Officers
Samuel R. Fuller, age 63, is a Senior Executive Vice
President of the Company. Mr. Fuller has been employed by
D.R. Horton since 1992. In 1995, he was promoted to Controller.
In 2000, Mr. Fuller was promoted to Executive Vice
President and Chief Financial Officer, and in 2000 he was also
appointed a director. In October 2003, Mr. Fuller was
promoted to Senior Executive Vice President. He retired from the
Board of Directors in November 2003.
Stacey H. Dwyer, age 40, is an Executive Vice
President and Treasurer of D.R. Horton and is in charge of
investor relations for D.R. Horton. She has been an employee of
D.R. Horton since 1991. She was promoted from Assistant
Secretary to Assistant Vice President in 1998 and from Assistant
Vice President to Executive Vice President in 2000. She also
became Treasurer in October 2003. Prior to 1991, Ms. Dwyer
was an auditor for Ernst & Young LLP.
Corporate
Governance Standards
Our Board of Directors has adopted a number of standards to
comply with requirements of the Sarbanes-Oxley Act of 2002, and
the final rules of the NYSE and Securities and Exchange
Commission (SEC) relating to Sarbanes-Oxley
and other corporate governance matters. Our Board has adopted
the D.R. Horton Corporate Governance Principles, which contain a
number of corporate governance initiatives designed to comply
with the NYSE listing standards (the NYSE
Rules) and the rules and regulations of the SEC (the
SEC Rules) relating to corporate governance.
The significant corporate governance initiatives adopted by the
Board of Directors are discussed below. The Board recently
revised the Corporate Governance Principles to provide for a
Director resignation policy described in
Proposal One The Election of Directors.
The newly revised Corporate Governance Principles can be found
under the Investor Relations and Corporate Governance links on
our website at www.drhorton.com and as Appendix A to
this Proxy Statement.
Director
Independence
Our Board of Directors is comprised of a majority of independent
directors in accordance with the NYSE Rules. Our Board made the
independence determination of its members based on the
Independence Standards discussed below.
Our Board has adopted a set of Independence
Standards, consistent with the NYSE Rules, to aid it
in determining whether a member of the Board is independent
under the NYSE Rules. In accordance with these Independence
Standards, a director must not have a direct or indirect
material relationship with the Company or its management, other
than as a director. The Independence Standards specify the
criteria by which the independence of our directors will be
determined, including strict guidelines for directors and their
immediate family members with respect to past employment or
affiliation with the Company, its management or its independent
auditor.
The Independence Standards are contained in the Corporate
Governance Principles set forth on our website under the
Investor Relations and Corporate Governance links and as
Appendix A to this Proxy Statement. These include
the following:
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A director who is an employee or whose immediate family member
is an executive officer of D.R. Horton is not independent
until three years after the end of such employment relationship.
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A director who receives, or whose immediate family member
receives, more than $100,000 per year in direct
compensation from D.R. Horton, other than director and committee
fees and pension or other forms of deferred compensation for
prior service (provided such compensation is not contingent in
any way on continued service), is not independent until three
years after he or she ceases to receive more than
$100,000 per year in compensation. Compensation received by
an immediate family member for service as a non-executive
employee or non-member of senior management of D.R. Horton will
not be considered in determining independence under this test.
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A director is not independent if (i) the director or an
immediate family member is a current partner of D.R.
Hortons internal or external auditor, (ii) the
director is a current employee of such a firm, (iii) the
directors immediate family member is a current employee of
such a firm and participates in the firms audit, assurance
or tax compliance (but not tax planning) practice, or
(iv) the director or an immediate family member was within
the last three years (but is no longer) a partner or employee of
such a firm and personally worked on D.R. Hortons audit
within that time.
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A director who is employed, or whose immediate family member is
employed, as an executive officer of another company where any
of D.R. Hortons present executives serve on that
companys compensation committee is not independent until
three years after the end of such service or the employment
relationship.
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A director who is an executive officer or an employee, or whose
immediate family member is an executive officer, of a company
that makes payments to, or receives payments from, D.R. Horton
for property or services in an amount which, in any single
fiscal year, exceeds the greater of $1 million, or 2% of
such other companys consolidated gross revenues, is not
independent until three years after falling below such threshold.
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If a director serves as an executive officer, director or
trustee of a charitable or educational organization, and D.R.
Hortons contributions to the organization are less than
$500,000, then the relationship will not be considered to be a
material relationship that would impair a directors
independence.
|
For purposes of these Independence Standards, an
immediate family member includes a
directors spouse, parents, children, siblings, mothers and
fathers-in-laws,
sons and
daughters-in-law,
brothers and
sisters-in-law,
and anyone (other than domestic employees) who shares the
directors home.
Audit
Committee Independence, Financial Literacy and Audit Committee
Financial Expert
In addition to being independent based on the Independence
Standards, the NYSE Rules and related SEC Rules require
that each member of an audit committee satisfy additional
independence and financial literacy requirements, and at least
one of these members must satisfy the additional requirement of
having accounting or related financial management expertise.
This additional requirement can be satisfied by the Board
determining that at least one Audit Committee member is an
audit committee financial expert within the
meaning of the SEC Rules. Accordingly, the Corporate Governance
Principles contain a set of standards that relate to audit
committee independence, financial literacy and audit committee
accounting and financial management expertise. Generally, the
additional independence standard provides that (i) a member
of the Audit Committee, or his or her immediate family members,
are prohibited from receiving any direct or indirect
compensation or fee from the Company or its affiliates, and
(ii) he or she may not be an affiliated person of the
Company or any of its subsidiaries. Generally, the financial
literacy standard provides that the Board, in its business
judgment, shall determine if each member is financially
literate, taking into account factors such as the members
education, experience and ability to read and understand
financial statements of public companies. Also, audit committee
financial experts must have five additional attributes, which
are (i) an understanding of generally accepted accounting
principles and financial statements, (ii) the ability to
assess the general application of such principles in connection
with the accounting for estimates, accruals and reserves,
(iii) experience preparing, auditing, analyzing or
evaluating financial statements that present a breadth and level
of complexity of accounting issues that are generally comparable
to the breadth and complexity of issues that can reasonably be
expected to be raised by the Companys financial
statements, or experience actively supervising one or more
persons engaged in such activities, (iv) an understanding
of internal control over financial reporting and (v) an
understanding of audit committee functions. All together,
attributes (i) through (v) are referred to as the
Financial Expert Attributes. The audit
committee financial expert standards are set forth in the
Corporate Governance Principles.
8
Board
Determinations
Based on the independence, financial literacy and financial
expert standards discussed above, the Board has determined that
Bradley S. Anderson, Michael R. Buchanan, Richard I. Galland and
Michael W. Hewatt are (i) independent, for purposes of
serving as independent members of the Board of Directors, the
Compensation Committee and the Nominating and Governance
Committees, (ii) independent, for purposes of serving as
independent members on the Audit Committee, and
(iii) financially literate, for purposes of serving on the
Audit Committee. The Board has also determined, as set forth
below, that Mr. Hewatt, Mr. Galland and
Mr. Buchanan each have the Financial Expert Attributes
described above.
Mr. Hewatt. Mr. Hewatt acquired the
Financial Expert Attributes primarily through his more than
30 years of experience working as a certified public
accountant for Coopers & Lybrand LLP and
Hewatt & Associates, CPAs and its predecessor firms.
Mr. Hewatts experience as an auditor provided him
active experience in conducting audits and reviewing financial
statements. This active accounting experience further developed
Mr. Hewatts understanding of generally accepted
accounting principles and financial statements and his ability
to assess the application of such principles in connection with
accounting for estimates, accruals and reserves.
Mr. Hewatts active status as a certified public
accountant requires him to stay current on pronouncements and
advisory notices issued by accounting, auditing and tax
regulatory boards and organizations.
During his career as a certified public accountant,
Mr. Hewatt has served on various management teams directly
responsible for designing and conducting testing procedures on
financial statements for compliance with applicable controls and
procedures, such as estimates, accruals and reserves, and
evaluating related internal control structures. These types of
compliance reviews were documented and evaluated and used in
forming audit procedures. In connection with certain audits and
compliance testing, Mr. Hewatt prepared and issued reports
to boards of directors, whereby he gained understanding into the
functioning of boards of directors and related committees.
Mr. Hewatt has additional experience in providing
management advisory services and providing tax advisory and tax
preparation services, which has provided Mr. Hewatt with a
strong background in the Internal Revenue Code and dealing with
the Internal Revenue Service. Mr. Hewatt has worked with
clients which include public and private companies, governmental
organizations and non-profit organizations.
Mr. Galland. Mr. Galland acquired
the Financial Expert Attributes primarily through years of
experience as president and chief executive officer of several
companies where he actively supervised principal accounting
officers and actively oversaw the preparation and evaluation of
financial statements. Throughout Mr. Gallands career,
he has actively participated in numerous mergers and
acquisitions where he was involved in evaluating balance sheets
and analyzing appropriate estimates, accruals and reserves to
record on the financial records of the acquiring company.
Mr. Galland also has had extensive experience as a board
member of two other public companies, where he also served as
chair of their audit committees.
Mr. Buchanan. Mr. Buchanan acquired
the Financial Expert Attributes primarily through his experience
as a commercial banker in the real estate and homebuilding
sectors, including serving as head of Bank of Americas
national real estate group. Mr. Buchanans
responsibilities as a banker required him to analyze and
evaluate financial statements in order to make credit and
lending decisions. In this regard, he developed significant
expertise in understanding the integrity of the financial
information used to prepare financial statements and how such
information should be used to analyze and evaluate a
companys financial condition and its ability to meet the
Companys debt obligations. As head of the national real
estate group at Bank of America, Mr. Buchanan also actively
supervised others in conducting financial statement and
financial condition analysis and evaluation.
As provided by the safe harbor contained in the SEC Rules, our
audit committee financial experts will not be deemed
experts for any purpose as a result of being
so designated, such designation does not impose on such persons
any duties, obligations or liabilities that are greater than the
duties, obligations and liabilities imposed on such persons as
members of the Audit Committee or the Board of Directors in the
absence of such designation, and such designation does not
affect the duties, obligations or liabilities of any other
member of the Audit Committee or the Board of Directors.
9
The Board also determined that Donald R. Horton, Donald J.
Tomnitz and Bill W. Wheat are not independent members of the
Board, because they currently are executive officers of, and
employed by, the Company.
Code
of Ethical Conduct for the CEO, CFO and Senior Financial
Officers
In accordance with SEC Rules, the Audit Committee and the Board
have adopted the Code of Ethical Conduct for the CEO, CFO and
Senior Financial Officers. The Board believes that these
individuals must set an exemplary standard of conduct for D.R.
Horton, particularly in the areas of accounting, internal
accounting control, auditing and finance. The ethics code sets
forth ethical standards the designated officers must adhere to
and other aspects of accounting, auditing and financial
compliance. The full text of the Code of Ethical Conduct for
CEO, CFO and Senior Financial Officers has been posted to
the Companys website, and can be found under the Investor
Relations and Corporate Governance links.
Corporate
Code of Business Conduct and Ethics
The Board of Directors has adopted a Corporate Code of
Business Conduct and Ethics for employees and directors of
D.R. Horton in accordance with the NYSE Rules. The Board adopted
the Corporate Code of Business Conduct and Ethics to
provide guidance to the Board and management in areas of ethical
business conduct and risk and provide guidance to employees and
directors by helping them to recognize and deal with ethical
issues including, but not limited to, (i) conflicts of
interest, (ii) corporate opportunities,
(iii) confidentiality, (iv) fair dealing,
(v) protection of corporate assets, (vi) compliance
with rules and regulations, including insider trading of
securities, and (vii) confidential reporting of unethical
behavior and hotline telephone numbers. The Corporate Code of
Business Conduct and Ethics can be found on our website
under the Investor Relations and Corporate Governance links.
Qualifications
for Directors
The Nominating and Governance Committee utilizes a variety of
methods for identifying nominees for director, including
considering potential director candidates who come to the
committees attention through current officers, directors,
professional search firms, stockholders or other persons. Once a
potential nominee has been identified, the Nominating and
Governance Committee evaluates whether the nominee has the
appropriate skills and characteristics required to become a
director in light of the then current
make-up of
the Board of Directors. This assessment includes an evaluation
of the nominees judgment and skills, such as his or her
depth of understanding of the Companys industry, financial
sophistication, leadership and objectivity, all in the context
of the perceived needs of the Board of Directors at that point
in time.
In addition to the foregoing, the Companys Corporate
Governance Principles provide that each member of the Board of
Directors should have the following minimum characteristics:
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the highest personal and professional ethical standards,
integrity and values;
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a commitment to representing the long-term interests of the
stockholders;
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practical wisdom and mature judgment;
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be objective and inquisitive; and
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be prepared to offer his or her resignation in the event of any
significant change in personal circumstances that could affect
the discharge of his or her responsibilities as a director,
including a change in his or her principal job responsibilities.
|
Ordinarily, directors who serve as CEOs or in equivalent
positions for other companies should not serve on more than one
other board of a public company in addition to the D.R. Horton
Board, and other directors should not serve on more than two
other boards of public companies in addition to the D.R. Horton
Board. Because of the value the Board places on having directors
who are knowledgeable about the Company and its operations,
neither the Board nor the Nominating and Governance Committee
believes that arbitrary term limits on directors service
are appropriate.
10
Procedures
for Nominating or Recommending for Nomination Candidates for
Director
Any stockholder may submit a nomination for director by
following the procedures outlined in our Bylaws and described
under Proposal One Election of Directors
in this Proxy Statement. In addition, the Nominating and
Governance Committee has adopted a policy permitting
stockholders to recommend candidates for director for
consideration by the committee, which will consider such
candidates on the same basis as candidates identified through
other means. Stockholders wishing to recommend candidates for
election at the 2008 Annual Meeting must give notice to the
Nominating and Governance Committee no more than 150 days
and no less than 120 days prior to the anniversary date of
this Proxy Statement. All director candidates shall, at a
minimum, possess the qualifications for director discussed
above. Each notice must set forth (1) the name and mailing
address of such stockholder, (2) the number of shares
beneficially owned by such stockholder, (3) the name, age,
business address and residence address of each candidate,
(4) the number of shares of Common Stock, if any,
beneficially owned by each candidate, and (5) all other
information relating to such person that is required to be
disclosed in the solicitations for proxies for election of
directors under the SEC Rules and NYSE Rules. The Nominating and
Governance Committee may request additional information to
assist in the evaluation of the candidacy of such person.
Committees
of the Board
The Board of Directors has four committees: the Executive
Committee, the Audit Committee, the Compensation Committee and
the Nominating and Governance Committee. The Board of Directors
has adopted governing Charters for each of the Audit Committee,
the Compensation Committee and the Nominating and Governance
Committee. New rules in the area of stockholder nominations are
being considered by the SEC, and if adopted, the Board will
amend the Charter for the Nominating and Governance Committee
accordingly. Each of the Charters of the Audit Committee, the
Compensation Committee and the Nominating and Governance
Committee is posted on the Companys website, and can be
found under the Investor Relations and Corporate Governance
links. A copy of the Audit Committee Charter is also included as
Appendix B to this Proxy Statement.
Complaint
Procedures For Accounting, Internal Control, Auditing and
Financial Matters
In accordance with SEC Rules, the Audit Committee has
established procedures for (i) the receipt, retention and
treatment of complaints regarding accounting, internal control,
auditing or financial matters (collectively, Accounting
Matters) and (ii) the confidential, anonymous
submission by employees of concerns regarding questionable
Accounting Matters. The Audit Committee oversees treatment of
complaints and concerns in this area. The full text of the
Complaint Procedures For Accounting, Internal Control,
Auditing and Financial Matters has been posted to the
Companys website, and can be found under the Investor
Relations and Corporate Governance links.
Executive
Sessions of the Board of Directors
In accordance with the NYSE Rules, the Board of Directors has
held and will continue to hold regularly scheduled executive
sessions of the non-management directors, all of whom are
independent. Mr. Michael R. Buchanan, Chairperson of
the Nominating and Governance Committee, presides at these
independent sessions.
Communications
with the Board of Directors
You can communicate with any member of our Board of Directors by
sending the communication to the Chairperson of the Nominating
and Governance Committee, who also serves as the Presiding
Director. Currently, Mr. Buchanan serves as chairperson of
the Nominating and Governance Committee. Send communications to:
Presiding Director c/o Chief Legal Officer, D.R. Horton,
Inc., 301 Commerce Street, Suite 500, Fort Worth,
Texas 76102. Our Chief Legal Officer will review the
communications and determine if such communications come within
the purview of a Board committee or Board member(s). After such
determination, these communications will be promptly forwarded
to such Board member(s) or the Presiding Director as applicable.
The Presiding Director reports these communications to the Board
on a quarterly basis. Further information may be obtained on our
website at www.drhorton.com under the Investor Relations and
Corporate Governance links.
11
BENEFICIAL
OWNERSHIP OF COMMON STOCK
Management
The following table shows the beneficial ownership of the Common
Stock of D.R. Horton as of November 15, 2006 by
(i) all D.R. Horton directors and director nominees,
(ii) all D.R. Horton executive officers, and (iii) all
D.R. Horton directors and executive officers as a group. Unless
stated otherwise, the shares are owned directly and the named
beneficial owners possess sole voting and investment power with
respect to the shares set forth in the table.
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Amount and Nature of
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Common Stock
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Beneficially Owned(1)
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|
Number of
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|
Shares Beneficially
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|
Percent of
|
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Name of Beneficial Owner
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Owned
|
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|
Class(2)
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|
Donald R. Horton
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|
27,031,979
|
(3)
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|
8.62
|
%
|
Bradley S. Anderson
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20,948
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*
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Michael R. Buchanan
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12,000
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*
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Stacey H. Dwyer
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|
186,948
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*
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Samuel R. Fuller
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|
79,940
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(4)
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*
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Richard I. Galland
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36,299
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*
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|
Michael W. Hewatt
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|
2,000
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|
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*
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Gordon D. Jones
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|
242,779
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*
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Thomas F. Noon
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361,828
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(5)
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*
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George W. Seagraves
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149,373
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*
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Donald J. Tomnitz
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1,477,884
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(6)
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*
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Bill W. Wheat
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81,630
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(7)
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*
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All directors and executive
officers as a group (12 persons)
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29,683,608
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9.42
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%
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* |
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Less than 1%. |
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A named executive officer. |
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(1) |
|
Beneficial ownership includes the following shares which the
executive officers and directors could acquire by exercising
stock options on, or within 60 days after,
November 15, 2006: Mr. Horton 213,333,
Mr. Anderson 10,000,
Mr. Buchanan 12,000, Ms. Dwyer
143,735, Mr. Fuller 49,173,
Mr. Galland 34,151, Mr. Hewatt
2,000, Mr. Jones 195,152,
Mr. Noon 256,818,
Mr. Seagraves 131,159,
Mr. Tomnitz 820,364 and
Mr. Wheat 77,166. These options represent an
aggregate of 1,945,051 shares. |
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(2) |
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The percentages are calculated based on 313,263,333 issued and
outstanding shares on November 15, 2006. For each person,
separately, his or her percentage was calculated by including
his or her options set forth in footnote (1) in both the
numerator and denominator, and for the group, the percentage was
calculated by including the 1,945,051 options set forth in
footnote (1) in both the numerator and denominator. |
|
(3) |
|
These shares do not include (i) 2,048,341 shares
directly owned by Donald Ryan Horton, an adult son of
Mr. Horton, and 2,048,338 shares directly owned by
Douglas Reagan Horton, another adult son of Mr. Horton,
(ii) 2,359,590 shares held by the Douglas Reagan
Horton Trust, (iii) 2,359,589 shares held by the
Donald Ryan Horton Trust, (iv) 1,368,005 shares held
by the Martha Elizabeth Horton Trust, and
(v) 1,499,984 shares held by the Donald Ray Horton
Trust. Mr. Horton disclaims any beneficial interest in
these shares. These trusts were established by Mr. Horton
and his wife for the benefit of their descendants. Terrill J.
Horton serves as the sole trustee of these trusts. Terrill J.
Horton is a retired director of the Company and the brother of
Donald R. Horton. Donald R. Hortons address is D.R.
Horton, Inc., D.R. Horton Tower, 301 Commerce Street,
Suite 500, Fort Worth, Texas 76102. |
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(4) |
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These shares do not include 4,000 shares owned by an IRA
for the benefit of Mr. Fullers spouse.
Mr. Fuller disclaims any beneficial interest in these
shares. |
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(5) |
|
These shares do not include an aggregate of 9,466 shares
owned by Mr. Noons adult sons. Mr. Noon
disclaims any beneficial interest in these shares. |
12
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(6) |
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These shares do not include 20,568 shares owned by an IRA
for the benefit of Mr. Tomnitzs spouse.
Mr. Tomnitz disclaims any beneficial interest in these
shares. |
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(7) |
|
These shares do not include 116 shares owned by an IRA for
the benefit of Mr. Wheats spouse and 332 shares
held in trust for the benefit of Mr. Wheats child.
Mr. Wheat disclaims any beneficial interest in these shares. |
Certain
Other Beneficial Owners
Based on filings under the Securities Exchange Act of 1934, as
amended, available as of November 15, 2006, the only other
known beneficial owners of more than 5% of D.R. Horton Common
Stock outstanding were the following:
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Shares Beneficially Owned
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Name and Address of Beneficial Owner
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Number
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Percent
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FMR Corp(1)
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46,972,039
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15.00
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%
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82 Devonshire Street
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Boston, Massachusetts 2109
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Wellington Management Company,
LLP(2)
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16,633,158
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5.27
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%
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75 State Street
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Boston, Massachusetts 02109
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Neuberger Berman Inc.(3)
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15,665,562
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5.01
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%
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605 Third Ave
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New York, New York 10158
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(1) |
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Based solely upon information contained in the most recently
filed Schedule 13G/A of FMR Corp., filed with the SEC on
February 14, 2006, reflecting beneficial ownership as of
December 31, 2005. According to this Schedule 13G/A,
FMR Corp. had sole voting power for 5,268,790 of these shares,
no shared voting power, sole dispositive power for all
46,972,039 of these shares and no shared dispositive power. |
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(2) |
|
Based solely upon information contained in the most recently
filed Schedule 13G of Wellington Management Company, LLP,
filed with the SEC on February 14, 2006, reflecting
beneficial ownership as of December 31, 2005. According to
this Schedule 13G, Wellington Management Company, LLP had
no sole voting power, shared voting power for 13,473,063 of
these shares, sole dispositive power for all 16,633,158 of these
shares and no shared dispositive power. |
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(3) |
|
Based solely upon information contained in the most recently
filed Schedule 13G of Neuberger Berman Inc., filed with the
SEC on February 15, 2006, reflecting beneficial ownership
as of December 31, 2005. According to this
Schedule 13G, Neuberger Berman Inc. had sole voting power
for 9,408,197 of these shares, shared voting power for 2,156,798
of these shares, no sole dispositive power and shared
dispositive power over all 15,665,562 of these shares. |
13
EXECUTIVE
COMPENSATION
The following tables show, with respect to the Chief Executive
Officer and the other named executive officers of D.R. Horton,
all plan and non-plan compensation awarded, earned or paid for
all services rendered in all capacities to D.R. Horton during
the periods indicated.
Summary
Compensation Table
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|
|
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|
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|
|
|
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|
|
|
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|
Long Term Compensation
|
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|
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Awards
|
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Payouts
|
|
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|
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|
|
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|
|
Annual Compensation
|
|
|
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|
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Other
|
|
|
Restricted
|
|
|
Underlying
|
|
|
|
|
|
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|
Name and
|
|
Fiscal
|
|
|
|
|
|
|
|
|
Annual
|
|
|
Stock
|
|
|
Options/
|
|
|
LTIP
|
|
|
All Other
|
|
Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Compensation
|
|
|
Awards
|
|
|
SARs
|
|
|
Payouts
|
|
|
Compensation
|
|
|
Donald R. Horton
|
|
|
2006
|
|
|
$
|
400,000
|
|
|
$
|
12,120,909
|
|
|
$
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
$
|
80,221(1
|
)
|
Chairman and Director
|
|
|
2005
|
|
|
|
400,000
|
|
|
|
12,824,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,139(2
|
)
|
|
|
|
2004
|
|
|
|
400,000
|
|
|
|
8,320,134
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
65,122(3
|
)
|
Donald J. Tomnitz
|
|
|
2006
|
|
|
$
|
300,000
|
|
|
$
|
12,120,909
|
|
|
$
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
$
|
61,194(1
|
)
|
Vice Chairman, President,
|
|
|
2005
|
|
|
|
300,000
|
|
|
|
12,824,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,511(2
|
)
|
CEO and Director
|
|
|
2004
|
|
|
|
300,000
|
|
|
|
8,320,134
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
|
|
|
|
|
|
|
50,095(3
|
)
|
Gordon D. Jones
|
|
|
2006
|
|
|
$
|
175,000
|
|
|
$
|
2,157,627
|
|
|
$
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
$
|
33,542(1
|
)
|
Executive Vice President and
|
|
|
2005
|
|
|
|
175,000
|
|
|
|
2,628,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,447(2
|
)
|
COO Central US
Operations(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George W. Seagraves
|
|
|
2006
|
|
|
$
|
175,000
|
|
|
$
|
1,552,997
|
|
|
$
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
$
|
37,665(1
|
)
|
Executive Vice President
|
|
|
2005
|
|
|
|
175,000
|
|
|
|
958,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,659(2
|
)
|
COO Eastern US
Operations(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas F. Noon
|
|
|
2006
|
|
|
$
|
175,000
|
|
|
$
|
2,488,189
|
|
|
$
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
$
|
39,524(1
|
)
|
Executive Vice President and
|
|
|
2005
|
|
|
|
175,000
|
|
|
|
3,818,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,107(2
|
)
|
COO Western US
Operations(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These amounts represent (a) credits made by D.R. Horton of
$40,000, $30,000, $17,500, $17,500 and $17,500 to the respective
accounts of Messrs. Horton, Tomnitz, Jones, Seagraves and
Noon under the Supplemental Executive Retirement Plan 2
(SERP 2), (b) the above-market portion
of earnings of $32,421, $23,394, $9,442, $13,565 and $15,424 to
the respective accounts of Messrs. Horton, Tomnitz, Jones,
Seagraves and Noon under SERP 2, (c) matching
contributions by D.R. Horton of $6,600 to the accounts of
Messrs. Horton, Tomnitz, Jones, Noon and Seagraves under
the D.R. Horton, Inc. Profit Sharing Plus Plan (the
401(k) Plan), and (d) the
individual participants portion of group health plan
premiums of $1,200 paid by D.R. Horton for the benefit of each
of Messrs. Horton and Tomnitz.
|
|
(2)
|
These amounts represent (a) credits made by D.R. Horton of
$40,000, $30,000, $17,500, $17,500 and $17,500 to the respective
accounts of Messrs. Horton, Tomnitz, Jones, Seagraves and
Noon under SERP 2, (b) the above-market portion of
earnings of $23,639, $17,011, $6,647, $9,859 and $11,307 to the
respective accounts of Messrs. Horton, Tomnitz, Jones,
Seagraves and Noon under SERP 2, (c) matching
contributions by D.R. Horton of $6,300 to the accounts of
Messrs. Horton, Tomnitz, Jones, Seagraves and Noon under
the 401(k) Plan, and (d) the individual participants
portion of group health plan premiums of $1,200 paid by D.R.
Horton for the benefit of each of Messrs. Horton and
Tomnitz.
|
|
(3)
|
These amounts represent (a) credits made by D.R. Horton of
$40,000 and $30,000 to the respective accounts of
Messrs. Horton and Tomnitz under SERP 2, (b) the
above-market portion of earnings of $17,772 and $12,745 to the
respective accounts of Messrs. Horton and Tomnitz under
SERP 2, (c) matching contributions by D.R. Horton of
$6,150 to the accounts of Messrs. Horton and Tomnitz under
the 401(k) Plan, and (d) the individual participants
portion of group health plan premiums of $1,200 paid by D.R.
Horton for the benefit of each of Messrs. Horton and
Tomnitz.
|
|
(4)
|
Messrs. Noon, Jones and Seagraves each became an executive
officer of D.R. Horton in April 2005 and served as executive
officers throughout fiscal year 2006 and into the first month of
fiscal 2007. Therefore,
|
14
|
|
|
for each of these executive officers, compensation only for
fiscal years 2005 and 2006 is reported. On October 17,
2006, D.R. Horton eliminated the Chief Operating Officer
positions. Mr. Jones and Mr. Seagraves continue to
serve the Company in non-executive officer positions.
Mr. Noon resigned from the Company, effective
October 20, 2006.
|
The following table sets forth information about options that
were granted to our Chief Executive Officer and the other named
executive officers during the fiscal year ended
September 30, 2006.
Option/SAR
Grants in Last Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Percent of
|
|
|
|
|
|
|
|
|
Potential Realizable Value at
|
|
|
|
Securities
|
|
|
Total Options/
|
|
|
|
|
|
|
|
|
Assumed Annual Rates of Stock
|
|
|
|
Underlying
|
|
|
SARs Granted
|
|
|
Exercise or
|
|
|
|
|
|
Price Appreciation for Option Term
|
|
|
|
Options/SARs
|
|
|
to Employees
|
|
|
Base Price
|
|
|
Expiration
|
|
|
5%
|
|
|
10%
|
|
Name
|
|
Granted(1)
|
|
|
in Fiscal Year
|
|
|
per Share
|
|
|
Date
|
|
|
(Stock Price $47.95)
|
|
|
(Stock Price $76.36)
|
|
|
Donald R. Horton
|
|
|
150,000
|
|
|
|
4.99
|
%
|
|
$
|
29.44
|
|
|
|
5/2/2016
|
|
|
$
|
2,777,199
|
|
|
$
|
7,037,967
|
|
Donald J. Tomnitz
|
|
|
100,000
|
|
|
|
3.33
|
%
|
|
$
|
29.44
|
|
|
|
5/2/2016
|
|
|
$
|
1,851,466
|
|
|
$
|
4,691,978
|
|
Gordon D. Jones
|
|
|
40,000
|
|
|
|
1.33
|
%
|
|
$
|
29.44
|
|
|
|
5/2/2016
|
|
|
$
|
740,586
|
|
|
$
|
1,876,791
|
|
George W. Seagraves
|
|
|
40,000
|
|
|
|
1.33
|
%
|
|
$
|
29.44
|
|
|
|
5/2/2016
|
|
|
$
|
740,586
|
|
|
$
|
1,876,791
|
|
Thomas F. Noon(2)
|
|
|
40,000
|
|
|
|
1.33
|
%
|
|
$
|
29.44
|
|
|
|
5/2/2016
|
|
|
$
|
740,586
|
|
|
$
|
1,876,791
|
|
|
|
|
(1) |
|
These shares are covered by non-qualified stock options granted
under the D.R. Horton 2006 Stock Incentive Plan.
Mr. Hortons options and Mr. Tomnitzs
options vest as to 20% of the grant amount each year.
Mr. Noons, Mr. Joness and
Mr. Seagravess options vest with respect to 10% of
the grant amount on each of the first nine anniversaries of the
grant date, and the final 10% of the grant vests 9.75 years
after the grant date. However, each option becomes fully
exercisable upon a change of control of D.R. Horton, or upon the
death or disability of the option holder, or upon his or her
retirement at or after age 65. |
|
(2) |
|
Mr. Noon resigned from his position with the Company on
October 20, 2006. None of the shares underlying the option
had vested at the time of resignation and, pursuant to the terms
of the 2006 Stock Incentive Plan, the option was terminated. |
Aggregated
Option/ SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/ SAR Values
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Securities Underlying
|
|
Value of
|
|
|
|
|
|
|
|
|
Unexercised Options/SARs
|
|
Unexercised
In-the-Money
|
|
|
Shares Acquired
|
|
|
|
|
|
at Fiscal
|
|
Options/SARs at
|
|
|
on Exercise
|
|
|
Value
|
|
|
Year-End
|
|
Fiscal Year-End(2)
|
Name
|
|
(#)
|
|
|
Realized(1)
|
|
|
Exercisable(E)/Unexercisable(U)
|
|
Exercisable(E)/Unexercisable(U)
|
|
Donald R. Horton
Common Stock
|
|
|
|
|
|
|
|
|
|
213,333(E)/270,000(U)
|
|
$2,205,333(E)/ $708,000(U)
|
Donald J. Tomnitz
Common Stock
|
|
|
72,595
|
|
|
$
|
2,010,029
|
|
|
820,364(E)/278,373(U)
|
|
$14,430,474(E)/ $2,261,829(U)
|
Gordon D. Jones
Common Stock
|
|
|
18,151
|
|
|
$
|
336,670
|
|
|
181,233(E)/211,154(U)
|
|
$3,077,410(E)/ $2,277,115(U)
|
George W. Seagraves
Common Stock
|
|
|
13,244
|
|
|
$
|
369,860
|
|
|
121,169(E)/178,086(U)
|
|
$2,102,843(E)/ $2,001,035(U)
|
Thomas F. Noon(3)
Common Stock
|
|
|
23,259
|
|
|
$
|
625,962
|
|
|
256,818(E)/170,595(U)
|
|
$4,575,445(E)/ $1,471,975(U)
|
|
|
(1)
|
Based upon the difference between the exercise prices of the
options and the closing prices of our Common Stock on the dates
on which the stock options were exercised.
|
|
(2)
|
Based upon the difference between the exercise prices of the
options and the closing price of our Common Stock on
September 29, 2006.
|
15
|
|
(3) |
Mr. Noon resigned from his position with the Company on
October 20, 2006. Pursuant to the terms of the 2006 Stock
Incentive Plan, all of Mr. Noons unexercisable
options described above were terminated.
|
Compensation
of Directors
During fiscal year 2006, D.R. Horton paid directors fees only to
non-management directors. During the first quarter of fiscal
year 2006, D.R. Horton paid each of these directors a fee of
$7,500 per Board meeting attended in person or by
tele-conference, an annual fee, paid in quarterly installments,
of $2,500 per committee for serving on the Audit Committee,
Compensation Committee and the Nominating and Governance
Committee of the Board and an additional fee, paid in quarterly
installments, of $1,250 for serving as a Chairperson of a
Committee. On November 17, 2005, the Board of Directors
approved an increase in director fees, committee member fees and
chairperson fees payable to non-management directors of the
Company beginning with the first Board meeting following
November 17, 2005. The increase provided that each
non-management director, beginning with the first Board meeting
following November 17, 2005, will be paid a fee of
$10,000 per Board meeting attended in person or by
tele-conference, paid quarterly and not to exceed
$40,000 per year. In addition, each non-management director
who serves on a committee of the Board of Directors will receive
an annual fee of $5,000 per committee paid quarterly, and
each non-management director who serves as the Chairperson of a
Committee of the Board of Directors will receive an annual fee
of $2,500 per committee paid quarterly. The Board has also
approved this fee structure for fiscal year 2007.
As a result of the above described director and committee fee
policy, our non-management directors, Bradley S. Anderson,
Richard I. Galland, Michael R. Buchanan and Michael W. Hewatt
each received a total of $37,500 in director fees. In addition,
Mr. Anderson, Mr. Buchanan and Mr. Galland each
received committee fees of $4,375 for serving on the Audit
Committee, $4,375 for serving on the Compensation Committee and
$4,375 for serving on the Nominating and Governance Committee
during fiscal year 2006. Mr. Hewatt received $4,375 for
serving on each of the Audit Committees and the Nominating and
Governance Committee and $3,750 for a partial year of service on
the Compensation Committee. Also, Mr. Galland received an
additional fee of $2,187.50 for serving as Chairperson of the
Audit Committee. Mr. Anderson received an additional fee of
$2,187.50 for serving as Chairperson of the Compensation
Committee during fiscal year 2006. Mr. Buchanan received an
additional fee of $2,187.50 for serving as Chairperson of the
Nominating and Governance Committee in fiscal year 2006.
Ms. Francine I. Neff, a former director who retired
from our Board of Directors following our 2006 Annual Meeting of
Stockholders, received $17,500 for her service on the Board and
an aggregate fee of $5,625 for her service on the Audit
Committee, Compensation Committee and Nominating and Governance
Committee prior to her retirement. Additionally, on May 2,
2006, each non-management director received a grant of options
to purchase 10,000 shares of our common stock at an
exercise price of $29.44. The options vest over five years and
have a ten year term. Directors coming to meetings from outside
the Dallas-Fort Worth area received reimbursement for
expenses incurred to attend Board and committee meetings.
Our three management directors are Donald R. Horton, Donald J.
Tomnitz and Bill W. Wheat. These three management directors did
not receive any director fees for serving as directors of the
Company. The compensation of Mr. Horton and
Mr. Tomnitz, as officers of the Company, is set forth under
the Executive Compensation section of this Proxy Statement.
Mr. Wheat, in his capacity as an Executive Vice President
and the Chief Financial Officer of the Company, was paid an
annual salary of $200,000 and a bonus of $350,000 for fiscal
year 2006. Mr. Wheat was also paid other compensation of
$32,090, which represents a credit and the above-market portion
of earnings to his account under SERP 2, a matching
contribution under the 401(k) Plan, and a portion of group
health plan premiums paid for his benefit. Additionally, on
May 2, 2006, Mr. Wheat received a grant of options to
purchase 40,000 shares of our common stock at an exercise
price of $29.44. Mr. Wheats salary and discretionary
bonus plan for the 2007 fiscal year remain the same as for the
2006 fiscal year.
No director of D.R. Horton who receives compensation from D.R.
Horton for services other than as a director received any
additional compensation for serving as a director of D.R.
Horton. However, D.R. Horton paid the participants portion
of premiums pursuant to D.R. Hortons major medical plan
for all directors except for Mr. Anderson,
Mr. Buchanan, Mr. Galland and Mr. Hewatt. The
amount of such premiums paid by
16
D.R. Horton during the 2006 fiscal year for each director was
approximately $100 per month, or $1,200 in the aggregate.
Transactions
with Management
On the effective date of the 1998 merger between D.R. Horton and
Continental Homes Holding Corp., Bradley S. Anderson, a former
director of Continental, was elected a director of D.R. Horton.
In connection with the merger, D.R. Horton agreed to indemnify
Mr. Anderson, along with the other former Continental
directors, in connection with their prior service as directors
or executive officers of Continental.
Effective as of October 20, 2006, Thomas F. Noon, Chief
Operating Officer Western U.S. Operations,
resigned from his position with the Company. In connection with
Mr. Noons resignation, the Company and Mr. Noon
entered into an agreement regarding his resignation dated
November 3, 2006. Pursuant to the terms of the agreement,
the Company agreed to pay Mr. Noon a lump sum payment of
$52,115. Mr. Noon received payment for earned and unpaid
salary, vacation through the date of his resignation and bonus
through September 30, 2006 and will continue to be paid
salary, at an annual rate of $175,000, and health benefits for a
period of 60 days following his resignation.
Compensation
Committee Interlocks and Insider Participation
During our fiscal year ended September 30, 2006, D.R.
Hortons Compensation Committee was composed of
Mr. Bradley S. Anderson, Mr. Michael R. Buchanan,
Mr. Richard I. Galland, Mr. Michael W. Hewatt
and, until her retirement immediately following our 2006 Annual
Meeting of Stockholders, Ms. Francine I. Neff, with
Mr. Anderson serving as its Chairperson. None of the
members of the Compensation Committee has served D.R. Horton in
any capacity other than as a member of the board or a member of
a committee thereof. In 1998, Mr. Anderson was a party to
an indemnification arrangement with the Company as described
under the caption Transactions with
Management above.
Compensation
Committee Report on Executive Compensation
General. D.R. Horton 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 incentives that are based on performance
of the Company, particularly with regard to pre-tax income and
the market value of our Common Stock. D.R. Horton also has
attempted to develop an executive compensation policy that will
serve to align the interests of D.R. Horton, its executive
officers and its stockholders.
The primary components of executive compensation consist of:
|
|
|
|
|
Base salaries.
|
|
|
|
Cash bonus payments.
|
|
|
|
Deferred compensation plans.
|
|
|
|
Stock options.
|
Through the Companys current executive compensation
policy, a substantial portion of the compensation an executive
officer has the opportunity to earn consists of bonus and stock
option incentives.
Base Salaries. Base salaries for D.R.
Hortons executive officers for the 2006 fiscal year were
based on each executive officers level of experience,
level of responsibility, contributions made and potential for
significant contributions to D.R. Hortons success and
stockholder value, and D.R. Hortons historical levels of
base compensation for executive officers. For fiscal 2006,
Messrs. Horton and Tomnitz were paid salaries of $400,000
and $300,000, respectively. The salaries of Messrs. Horton
and Tomnitz, as set by the Compensation Committee, have remained
at these same levels since 2001 and such salaries are below the
average of comparable executives at the Companys
homebuilder peer group. No quantitative relative weights were
assigned to the above factors when setting base salaries.
17
Bonus Payments. The 2006 compensation for
executive officers provided each of D.R. Hortons executive
officers the opportunity to earn substantial bonuses in addition
to his or her 2006 annual base salary. See Summary
Compensation Table for more information regarding the
bonuses for the named executive officers.
Bonus to Chairman and Chief Executive
Officer. Messrs. Horton and Tomnitz each
received incentive bonus payments for achieving performance
goals with regard to quarterly consolidated pre-tax income of
D.R. Horton. The quarterly bonuses are based on a
pre-approved percentage of quarterly consolidated pre-tax
income. These goals and percentages were set and approved by the
Compensation Committee at the beginning of the 2006 fiscal year.
Based on the Companys performance of achieving the second
highest pre-tax income in the Companys history,
Messrs. Horton and Tomnitz each received a performance
bonus of $12,120,909 for fiscal year 2006, all of which was paid
under the D.R. Horton 2000 Incentive Bonus Plan.
Messrs. Hortons and Tomnitzs aggregate 2006
fiscal year bonuses were paid in quarterly installments, each
payment having been approved by the Compensation Committee prior
to payment. The Compensation Committee considered the factors
listed below in determining the performance goals at the
beginning of the fiscal year, and in determining whether to pay
the full amount of the bonus after the end of the fiscal year.
No quantitative relative weights were assigned to the following
factors:
|
|
|
|
|
The financial and operating performance of D.R. Horton in fiscal
2006 as compared to fiscal 2005.
|
|
|
|
An analysis of recent compensation of senior executive officers
of comparable homebuilding companies.
|
|
|
|
The financial and operating performance of D.R. Horton as
compared to D.R. Hortons business plan.
|
|
|
|
Other actions and activities by each executive officer to
maximize stockholder value.
|
The Compensation Committee did not take any action with respect
to Messrs. Hortons and Tomnitzs bonus plans
that would have increased or decreased the bonus payable to
Messrs. Horton or Tomnitz beyond their respective bonus
plans that were approved at the beginning of the 2006 fiscal
year.
Chief Operating Officers. Messrs. Jones,
Noon and Seagraves each received incentive bonus payments for
achieving performance goals with regard to quarterly
consolidated pre-tax income of their respective operating
regions. The quarterly bonuses are based on a pre-approved
percentage of quarterly consolidated pre-tax income of their
respective operating regions. These goals and percentages were
set and approved by the Compensation Committee at the beginning
of the 2006 fiscal year. Based on the consolidated pre-tax
income of their respective operating regions,
Messrs. Jones, Noon and Seagraves each received a
performance bonus of $2,157,627, $2,488,189 and $1,552,997, for
fiscal year 2006, all of which was paid under the
D.R. Horton 2000 Incentive Bonus Plan. The bonus payments
for the fourth quarter of fiscal 2006 were approved by the
Compensation Committee on November 16, 2006 for
Messrs. Jones and Seagraves and October 26, 2006 for
Mr. Noon. Mr. Noons bonus was determined earlier
than the bonuses of Messrs. Jones and Seagraves due to
Mr. Noons resignation from the Company effective as
of October 20, 2006. The Compensation Committee considered
the factors listed below in determining the performance goals at
the beginning of the fiscal year, and in determining whether to
pay the full amount of the bonus after the end of the fiscal
year. No quantitative relative weights were assigned to any of
the following factors:
|
|
|
|
|
The financial and operating performance of the Western, Central
and Eastern Operating regions in fiscal 2006 as compared to
fiscal 2005.
|
|
|
|
The financial and operating performance of the Western, Central
and Eastern operating regions as compared to the business plan
for such operating regions.
|
|
|
|
Other actions and activities by each executive officer to
maximize stockholder value.
|
Other Executive Officers. Based on
recommendations from the Chairman of the Board, the Compensation
Committee adopted discretionary bonus recommendations and
submitted such recommendations to the Board for Mr. Fuller,
Mr. Wheat, and Ms. Dwyer, the other executive officers
of the Company during the 2006 fiscal year who were not named
executive officers. In determining and adopting the
discretionary bonuses for
18
these executive officers, the Board took into account the
Companys executive compensation policy, including the
factors considered by the Compensation Committee in determining
bonuses for the other executive officers of the Company.
Deferred Compensation Plan. D.R. Horton
established the D.R. Horton Deferred Compensation Plan (the
Deferred Compensation Plan), effective as of
June 15, 2002. The Deferred Compensation Plan is the
successor to and superseded D.R. Hortons and Schuler
Homess previously established deferred unfunded
compensation plans. The Deferred Compensation Plan is an
unfunded deferred compensation plan maintained primarily to
provide deferred compensation benefits for a select group of
management or highly compensated employees as
defined by the Employee Retirement Income Security Act of 1974,
as amended. The Deferred Compensation Plan permits participants
voluntarily to defer receipt of compensation from D.R. Horton.
Amounts deferred are invested on behalf of the participant in
investment vehicles selected from time to time by the
administrators of the Deferred Compensation Plan. The Deferred
Compensation Plan was adopted and approved by the Compensation
Committee and ratified by the Board of Directors.
SERP 2. The Supplemental Executive Retirement
Plan 2 (SERP 2) was adopted by D.R. Horton in
1994 to permit eligible participants, which include our
executive officers, the regional presidents, most division
presidents and other selected employees, to defer income and
establish a source of funds payable upon retirement, death or
disability. Messrs. Hortons and Tomnitzs
participation in SERP 2 is approved by the Compensation
Committee annually at the beginning of the fiscal year. Pursuant
to SERP 2, if the executive is employed by the Company on
the last day of a fiscal year, then the Company will establish a
liability to such officer equal to 10% of his annual base salary
as of first day of such fiscal year. This liability will accrue
earnings in future years at a rate established by the
administrative committee for SERP 2.
Post-Employment Health
Insurance. Messrs. Horton and Tomnitz are
also entitled to post-employment health and dental insurance
coverage that is similar to the insurance coverage that is
currently provided by the Company to each of them, their spouses
and their dependent children. The post-employment insurance
coverage becomes effective upon Mr. Hortons and
Mr. Tomnitzs respective retirement, disability, death
or termination (without cause) from the Company and coverage
shall be for the life of each of Mr. Horton and
Mr. Tomnitz, respectively, and for the life of
Mr. Hortons spouse and Mr. Tomnitzs spouse.
Stock Option Grants. Grants of stock options
are made under the 2006 Stock Incentive Plan (the 2006
Stock Incentive Plan), which was adopted by the
Companys stockholders at the 2006 annual meeting of
stockholders. The 2006 Stock Incentive Plan replaced the 1991
Stock Incentive Plan, as amended (the 1991
Plan) and no further awards will be granted under the
1991 Plan. The 2006 Stock Incentive Plan is administered by the
Compensation Committee. The Board, the Compensation Committee
and the Company believe that stock options provide an important
long-term incentive to executive officers and align the
interests of D.R. Horton, its executive officers and its
stockholders by creating a direct link between executive
compensation and long-term performance of D.R. Horton.
Generally, when the Compensation Committee decides to grant
stock options to executive officers, in determining the number
of stock options to grant and the other material terms of the
stock option grants, the Compensation Committee makes a
subjective evaluation of:
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The overall performance of the Company in comparison to other
publicly-traded homebuilding companies.
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An analysis of recent compensation of senior executive officers
of comparable homebuilding companies.
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Recommendations of the Chairman of the Board, with the Chairman
not making a recommendation with respect to the option grant on
his behalf.
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Contributions the executive officer made and is anticipated to
make to the success of D.R. Horton.
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Level of experience and responsibility of the executive officer.
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Number of stock options that previously have been granted to the
executive officer.
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Number of stock options granted to other participants in the
stock incentive plans.
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19
In 2006, stock options were granted under the 2006 Stock
Incentive Plan to the following named executive officers and in
the following amounts: Mr. Horton, 150,000,
Mr. Tomnitz 100,000, Mr. Jones, 40,000, Mr. Noon,
40,000 and Mr. Seagraves, 40,000. Each of these options has
an exercise price of $29.44 per share and vests over five years
for Messrs. Horton and Tomnitz and vests over
9.75 years for Messrs. Jones, Noon and Seagraves.
Mr. Noons options were cancelled when he resigned in
October 2006. The exercise price for each of these option grants
was based on the closing price of the Companys stock on
the date the Compensation Committee approved the grant of the
stock options at a committee meeting. Additional information
regarding the stock option grants to our named executive
officers is set forth in more detail under the under the
Option/SAR Grants in Last Fiscal Year table under the
Executive Compensation section of this proxy statement.
No quantitative relative weights were assigned to any of these
factors.
Chief Executive Officer 2006
Compensation. Donald J. Tomnitzs
compensation for the 2006 fiscal year consisted of an annual
base salary, bonuses and participation in the Incentive Bonus
Plan, the 2006 Stock Incentive Plan, the Deferred Compensation
Plan and SERP 2. The Compensation Committee sets this
compensation on the basis of D.R. Hortons executive
compensation policy and the factors described above.
Compliance with Internal Revenue Code
Section 162(m). Section 162(m) of the
Internal Revenue Code generally disallows a tax deduction to
publicly-held companies for compensation over $1 million
paid for any fiscal year to the corporations chief
executive officer and the other executive officers as of the end
of any fiscal year who are disclosed in the Summary
Compensation Table in the Companys proxy
statement. However, the statute exempts qualifying
performance-based compensation if certain requirements are met.
Early in fiscal year 2004, the Compensation Committee adopted,
and the stockholders approved, the Incentive Bonus Plan, as
amended. D.R. Horton generally intends for awards to its
executive officers under the bonus plan and its stock option
plan to qualify for the performance-based compensation exemption
under Section 162(m).
While D.R. Horton generally structures its compensation plans to
comply with the exemption requirements of Section 162(m),
corporate objectives, or other circumstances, may not always be
consistent with the requirements for, or permit, full
deductibility. Accordingly, the Board of Directors and the
Compensation Committee reserve the authority to award
non-deductible compensation to D.R. Hortons executive
officers as they deem appropriate. During the 2006 fiscal year,
the entire amount of the performance bonus paid to each of
Messrs. Horton, Tomnitz, Jones, Noon and Seagraves
qualified as performance-based compensation under
Section 162(m) because the bonus amounts awarded by the
Compensation Committee were within the limits of the Incentive
Bonus Plan. Accordingly, the bonuses paid to each of our named
executive officers were tax deductible by the Company. However,
the compensation of (i) Messrs. Tomnitz, Jones, Noon
and Seagraves arising from the exercise of options in the 2006
fiscal year that were initially granted in 1996, and
(ii) Messrs. Noon and Seagraves arising from the
exercise of options in the 2006 fiscal year of options that were
initially granted in 1995, was not deductible for tax purposes
by the Company because in 1996 and 1995 our 1991 Plan did not
contain an appropriate individual grant limitation. However, the
1991 Plan (the predecessor plan to the 2006 Stock Incentive
Plan) was amended in November 2001 to include an appropriate
individual grant limitation, and our 2006 Stock Incentive Plan
also includes an appropriate individual grant limitation.
COMPENSATION COMMITTEE:
Bradley S. Anderson, Chair
Richard I. Galland
Michael R. Buchanan
Michael W. Hewatt
20
Stock
Performance/Stock Performance Graph
The following graph illustrates the cumulative total stockholder
return on D.R. Hortons Common Stock for the last five
fiscal years through September 30, 2006 assuming a
hypothetical investment of $100 and a reinvestment of all
dividends paid on such an investment, compared to the
Standard & Poors 500 Stock Index and the S&P
500 Homebuilding Index.
The Compensation Committee report above, and the graph and the
related disclosure contained in this section of this Proxy
Statement, will not be deemed to be soliciting material or to be
filed with or incorporated by reference into any filing by D.R.
Horton under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that D.R. Horton
specifically incorporates the report, graph or related
disclosure by reference. The graph and related disclosure are
presented in accordance with SEC requirements. Stockholders are
cautioned against drawing any conclusions from the data
contained therein, as past results are not necessarily
indicative of future performance. The graph and related
disclosure in no way reflect D.R. Hortons forecast of
future financial performance.
COMPARISON
OF CUMULATIVE FIVE YEAR TOTAL RETURN
TOTAL
RETURN TO SHAREHOLDERS
(Includes reinvestment of dividends)
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Years Ending
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Base
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Period
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Company/Index
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Sep 01
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Sep 02
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Sep 03
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Sep 04
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Sep 05
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Sep 06
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D.R. HORTON INC
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100
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135.11
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240.07
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368.26
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542.51
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364.59
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S&P 500 INDEX
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100
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79.51
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98.91
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112.63
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126.44
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140.08
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S&P 500 HOMEBUILDING
INDEX
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100
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145.84
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225.86
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357.43
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512.15
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370.93
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21
MEETINGS
AND COMMITTEES OF THE BOARD
During fiscal year 2006, the Board of Directors of D.R. Horton
held five meetings and acted five times by written consent. Each
director attended all of the Board meetings and at least 90% of
the committee meetings for each committee on which he or she
served during fiscal year 2006. Executive sessions of our
non-management directors, all of whom are independent, are
regularly held. The sessions are scheduled and chaired by the
Chairperson of the Nominating and Governance Committee, who also
acts as our Presiding Director. Directors are encouraged to
attend annual meetings of our stockholders. The 2006 annual
meeting was attended by all of our current directors. During
fiscal year 2006, the Board of Directors had four standing
committees: an Executive Committee, an Audit Committee, a
Compensation Committee and a Nominating and Governance Committee.
Executive
Committee
The Executive Committee, while the Board is not in session,
possesses all of the powers and may carry out all of the duties
of the Board of Directors in the management of the business of
D.R. Horton, which by state or federal law or the NYSE Rules may
be delegated to it by the Board of Directors. The Executive
Committee acted 73 times by written consent during the 2006
fiscal year, of which 66 of these consents related to matters
that were routine to the operations of the Company, and seven of
these consents related to matters that were delegated to the
Executive Committee by the Board. During our 2006 fiscal year
and currently, the Executive Committee was and is composed of
Messrs. Horton, Tomnitz and Wheat.
Nominating
and Governance Committee
The members of the Nominating and Governance Committee are
Mr. Michael R. Buchanan, Mr. Bradley S. Anderson,
Mr. Richard I. Galland and Mr. Michael W. Hewatt, with
Mr. Buchanan serving as Chairperson. Each committee member
has been determined by the Board to be independent in accordance
with the NYSE Rules. During fiscal year 2006, the Nominating and
Governance Committee met four times, and each member attended in
person or by telephone conference all of the meetings.
The Nominating and Governance Committee Charter has been posted
to the Companys website under the Investor Relations and
Corporate Governance links. The Nominating and Governance
Committees primary purpose is to provide assistance to the
Board of Directors in fulfilling its responsibility to the
stockholders by:
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Identifying individuals qualified to become directors consistent
with criteria approved by the Board and recommending to the
Board for selection the qualified candidates for directorships
to be filled by the Board or by the stockholders;
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Developing and recommending to the Board a set of corporate
governance principles applicable to the Company; and
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Overseeing the evaluation of the Board and management.
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Compensation
Committee
The members of the Compensation committee are Mr. Bradley
S. Anderson, Mr. Michael R. Buchanan, Mr. Richard I.
Galland, and Mr. Michael W. Hewatt, with Mr. Anderson
serving as Chairperson. Each committee member has been
determined by the Board to be independent. During fiscal year
2006, the Compensation Committee met two times and acted by
written consent five times, and each member attended in person
or by telephone conference all of the meetings.
The Compensation Committee Charter has been posted to the
Companys website under the Investor Relations and the
Corporate Governance links. The Charter provides that the
Compensation Committee shall assist the Board of Directors in
discharging its responsibility to the stockholders with respect
to the Companys compensation programs and compensation of
the Companys executive officers.
The Compensation Committee Charter also sets forth the
responsibilities and duties of the committee regarding reviewing
the compensation for the Chief Executive Officer and other
executive officers, monitoring incentive and equity-based
compensation plans, preparing an annual report on executive
compensation and reporting to the Board of Directors.
22
Audit
Committee and Audit Committee Report
The members of the Audit Committee of the Board of Directors are
Mr. Richard I. Galland, Mr. Bradley S. Anderson,
Mr. Michael R. Buchanan and Mr. Michael W. Hewatt,
with Mr. Galland serving as Chairperson. The Audit
Committee met ten times during fiscal year 2006 and took no
action by written consent, and each member attended in person or
by telephone conference 90% or more of the meetings.
As discussed under the caption Corporate Governance
Standards on pages 7 and 8 of this Proxy
Statement, each member of the Audit Committee has been
determined by the Board to be independent and
financially literate in accordance with NYSE
Rules, the SEC Rules, and the corporate governance and
independent standards adopted by the Board. Also,
Messrs. Galland, Buchanan and Hewatt each have been
determined by the Board to be an audit committee
financial expert under such rules, regulations and
standards as are set forth in the Companys Corporate
Governance Principles posted on our website under the Investor
Relations and Corporate Governance links. The Boards
determinations are set forth on pages 8 and 9 of this Proxy
Statement.
The Audit Committee operates pursuant to an Audit Committee
Charter, which was approved and adopted by the Board of
Directors. A copy of the adopted Audit Committee Charter is
posted to the Companys website under the Investor
Relations and Corporate Governance links. A copy also
accompanies this Proxy Statement as Appendix B. The
duties and responsibilities of the Audit Committee are set forth
in its Charter. The Audit Committees primary purposes are
to:
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assist the Board in fulfilling its oversight responsibilities
relating to the:
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integrity of the Companys financial statements;
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Companys compliance with legal and regulatory requirements;
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independent auditors qualifications and
independence; and
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performance of the Companys internal audit function and
independent auditor; and
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prepare an Audit Committee report to be included in the
Companys annual proxy statement.
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The Audit Committee has reviewed and discussed with management
D.R. Hortons audited consolidated financial statements for
the fiscal year ended September 30, 2006. Further, the
Audit Committee has discussed with D.R. Hortons
independent auditor the matters required to be discussed by
Auditing Standards Board Statement on Auditing Standards
No. 61, as amended or supplemented, including D.R.
Hortons audited consolidated financial statements for the
fiscal year ended September 30, 2006, the auditors
responsibility under generally accepted auditing standards,
significant accounting policies, managements judgments and
accounting estimates, any audit adjustments, other information
in documents containing audited financial statements and other
matters. Finally, the Audit Committee has received and reviewed
the written disclosures and the letter from the independent
auditor required by the Independence Standards Board
Independence Standard No. 1, as amended or supplemented,
and has discussed the auditors independence with the
auditor.
Based on its review and discussion described above, the Audit
Committee has recommended to the Board of Directors that the
audited consolidated financial statements for fiscal year 2006
be included in D.R. Hortons Annual Report on
Form 10-K
for the fiscal year ended September 30, 2006. Further, the
Audit Committee approved the engagement of Ernst &
Young LLP as D.R. Hortons independent auditor for the
fiscal year ending September 30, 2007.
AUDIT COMMITTEE:
Richard I. Galland, Chair
Bradley S. Anderson
Michael R. Buchanan
Michael W. Hewatt
23
INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
Ernst & Young LLP served as D.R. Hortons
independent auditor for the fiscal years ended
September 30, 2006 and September 30, 2005 and has been
engaged by the Audit Committee to continue to serve through the
2007 fiscal year. A representative of Ernst & Young LLP
is expected to be present at the 2007 Annual Meeting and will
have an opportunity to make a statement and to respond to
appropriate questions from stockholders.
Audit
Fees and All Other Fees
The following table shows the fees paid or accrued by D.R.
Horton for the audit and other services provided by
Ernst & Young LLP for fiscal years ended
September 30, 2006 and September 30, 2005.
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Fiscal Year Ended
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September 30,
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2006
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2005
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Audit fees
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$
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1,643,104
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$
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1,717,882
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Audit-Related fees(1)
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80,527
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102,175
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Tax fees(2)
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45,700
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45,150
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All other fees
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Total(3)
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$
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1,769,331
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$
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1,865,207
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(1) |
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Related primarily to audits of employee benefit plans, the
statutory audit of the Companys captive insurance company
and consultations related to Sarbanes-Oxley compliance. |
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(2) |
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Related primarily to tax compliance services. |
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(3) |
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Of the fees listed above, approved by the Audit Committee, none
were approved based on waiver of pre-approval under
Rule 2-01(c)(7)(i)(C)
of
Regulation S-X. |
Policy on
Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services
The Audit Committee has responsibility for appointing, setting
compensation and overseeing the work of the independent auditor.
In recognition of this responsibility, the Audit Committee has
established a policy to pre-approve audit and permissible
non-audit services provided by the independent auditor.
In connection with the engagement of the independent auditor for
the 2007 fiscal year, the Audit Committee pre-approved the
services listed below by category of service, including the
pre-approval of fee limits. The Audit Committees
pre-approval process by category of service also includes a
review of specific services to be performed and fees expected to
be incurred within each category of service. The term of any
pre-approval is 12 months from the date of the
pre-approval, unless the Audit Committee specifically provides
for a different period. During fiscal 2007, circumstances may
arise when it may become necessary to engage the independent
auditor for additional services not contemplated in the original
pre-approval. In those instances, the Audit Committee requires
separate pre-approval before engaging the independent auditor.
The services pre-approved by the Audit Committee to be performed
by our auditor during our fiscal year 2007, include the
following:
Audit Services include audit work performed in the
preparation of financial statements (including quarterly
reviews), as well as work that generally only the independent
auditor can reasonably be expected to provide, including comfort
letters, statutory audits, and attest services and consultation
regarding financial accounting
and/or
reporting standards.
Audit-Related Services are for assurance and related
services that are traditionally performed by the independent
auditor, including due diligence related to mergers and
acquisitions, employee benefit plan audits, and special
procedures required to meet certain regulatory requirements.
24
Tax Services include all services performed by the
independent auditors tax personnel except those services
specifically related to the audit of the financial statements,
and include fees in the areas of tax compliance, tax planning,
and tax advice.
All Other Fees are those associated with permitted
services not included in the other categories. The Company
generally does not request such services from the independent
auditor.
The Audit Committee may delegate pre-approval authority to one
or more of its members. The member or members to whom such
authority is delegated shall report any pre-approval decisions
to the Audit Committee at its next scheduled meeting. The Audit
Committee may not otherwise delegate its responsibilities to
pre-approve services performed by the independent auditor to
management.
PROPOSAL TWO
SHAREHOLDER
PROPOSAL CONCERNING
A MAJORITY VOTE STANDARD FOR THE ELECTION OF DIRECTORS
D.R. Horton has received the following proposal from a
shareholder. Pursuant to
Rule 14a-8(l)(1)
of the Securities Exchange Act of 1934, we will provide the
name, address and number of securities held by the shareholder
proponent of this proposal promptly upon receipt of a written or
oral request. The Companys contact information is: D.R.
Horton, Inc., Attention: Corporate Counsel, D.R. Horton Tower,
301 Commerce Street, Suite 500, Fort Worth, Texas
76102;
e-mail
tbmontano@drhorton.com; and telephone
(817) 390-8200.
D.R. Horton is not responsible for the contents of the
supporting statement or the shareholder proposal, both of which
are quoted verbatim in italics below.
Supporting
Statement and Proposal of Shareholder Proponent
Resolved:
That the shareholders of DR Horton (Company)
hereby request that the Board of Directors initiate the
appropriate process to amend the Companys governance
documents (certificate of incorporation or bylaws) to provide
that director nominees shall be elected by the affirmative vote
of the majority of votes cast at an annual meeting of
shareholders.
Supporting Statement:
Our Company is incorporated in Delaware. Delaware law
provides that a companys certificate of incorporation or
bylaws may specify the number of votes that shall be necessary
for the transaction of any business, including the election of
directors. (DGCL, Title 8, Chapter 1, Subchapter VII,
Section 216). The law provides that if the level of voting
support necessary for a specific action is not specified in a
corporations certificate or bylaws, directors shall
be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to
vote on the election of directors.
Our Company presently uses the plurality vote standard to
elect directors. This proposal requests that the Board initiate
a change in the Companys director election vote standard
to provide that nominees for the board of directors must receive
a majority of the vote cast in order to be elected or re-elected
to the Board.
We believe that a majority vote standard in director
elections would give shareholders a meaningful role in the
director election process. Under the Companys current
standard, a nominee in a director election can be elected with
as little as a single affirmative vote, even if a substantial
majority of the votes cast are withheld from that
nominee. The majority vote standard would require that a
director receive a majority of the vote cast in order to be
elected to the Board.
Some companies have adopted board governance policies
requiring director nominees that fail to receive majority
support from shareholders to tender their resignations to the
board. We believe that these policies are inadequate for they
are based on continued use of the plurality standard and would
allow
25
director nominees to be elected despite only minimal
shareholder support. We contend that changing the legal standard
to a majority vote is a superior solution that merits
shareholder support.
Our proposal is not intended to limit the judgment of the
Board in crafting the requested governance change. For instance,
the Board should address the status of incumbent director
nominees who fail to receive a majority vote under a majority
vote standard and whether a plurality vote standard may be
appropriate in director elections when the number of director
nominees exceeds the available board seats.
We urge your support FOR this important director election
reform.
Statement
in Opposition to Shareholder Proposal
After careful consideration of the subject matter of this
stockholder proposal, the Board of Directors of D.R. Horton
recommends a vote against this proposal because D.R. Horton
recently adopted a policy that the Board believes provides a
better structure for addressing the concerns reflected by the
proposal. We believe the policy, which is set forth in our
Corporate Governance Principles, is effective in enhancing the
stockholder role in the director election process without
placing undue limitations on the Boards judgment in
addressing the circumstances giving rise to a majority of votes
withheld.
As described under Proposal One Election of
Directors, D.R. Hortons amended Corporate Governance
Principles require any nominee for the Board of Directors who
fails to receive a majority affirmative vote in an uncontested
election to promptly tender his or her resignation to the Board
of Directors. The Nominating and Governance Committee will
assess whether the resignation should be accepted and make its
recommendation to the Board of Directors. The Board of Directors
will then consider the Committees recommendation within a
reasonable period of time and take the action it deems
appropriate.
In conducting the assessment, both the Nominating and Governance
Committee and the Board of Directors will consider all
information they deem relevant, including the underlying reasons
for the results of the election, the length of service and
qualifications of the director, the directors
contributions to D.R. Horton, our compliance with listing
standards, and our Corporate Governance Principles. As a result,
each nominee as to whom a majority of votes is withheld will
undergo a high degree of review as to his or her ability to
serve as a director.
The default standard for election of directors for Delaware
corporations has long been the plurality vote standard. Our
amended Corporate Governance Principles modify the plurality
vote standard in uncontested elections in a manner that we
believe affords our stockholders greater input than they would
have under a pure plurality standard. However, it also retains
for the Board the ability to exercise its judgment on
case-by-case
basis. We believe this is in the best interest of all
stockholders. For example, Delaware law provides that an
incumbent director who is not re-elected holds over
and continues to serve with the same voting rights and powers
until his or her successor is elected and qualified. A majority
voting standard does not necessarily address hold
over directors. However, our amended Corporate Governance
Principles do address hold over directors by
providing that a director nominee who receives majority of votes
withheld from his or her election will tender his or her
resignation. This then allows the Nominating and Governance
Committee and the Board of Directors to assess fully whether to
(i) appoint a successor, (ii) incur the expenses of a
special meeting of stockholders to elect a replacement, or
(iii) to permit the director to remain in office. The last
alternative may be appropriate if the Board believes the
underlying stockholder concerns are better addressed in another
manner or if required to meet the listing standards of the New
York Stock Exchange.
Over 120 public companies have adopted a policy similar to our
amended Corporate Governance Principles. Moreover, we believe
adopting the majority vote standard is not necessary considering
our recent election results. Since we became a publicly traded
company in 1992, no director nominee has ever received a greater
number of votes withheld from his or her election than votes for
his or her election. As a result, we believe adopting the voting
requirement that has been proposed would not have ever affected
the outcome of our election process. Since our stockholders have
a history of electing highly qualified, independent directors
under a traditional plurality system, we believe a change to a
strict majority voting requirement is not
26
necessary to improve our corporate governance processes,
especially in light of our recent changes to our Corporate
Governance Principles.
The Board of Directors Unanimously Recommends that
Shareholders Vote AGAINST this Proposal.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires D.R. Hortons directors, certain of its
officers, and persons who own more than 10% of a registered
class of D.R. Hortons equity securities to file reports of
ownership and changes in ownership with the SEC. Such officers,
directors and greater than 10% stockholders are required by SEC
regulations to furnish D.R. Horton 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 and on written
representations from certain reporting persons that no
Form 5 reports were required for those persons, D.R. Horton
believes that all filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were
complied with during the year ended September 30, 2006,
with the exceptions that Mr. Horton inadvertently did not
timely file a Form 4 to reflect a non-discretionary
distribution of 718 shares from an exchange fund,
Mr. Tomnitz inadvertently did not timely file a Form 4
to reflect the exercise of an option to purchase and hold
8,232 shares, and Mr. Galland inadvertently filed a
Form 5 for fiscal year 2005 incorrectly reporting the
number of shares beneficially held. In each case, the individual
filed a late or amended filing to correct the respective
deficiency.
STOCKHOLDER
PROPOSALS FOR 2008 ANNUAL MEETING
Any stockholder who intends to present a proposal for action at
D.R. Hortons 2008 Annual Meeting of Stockholders and to
have D.R. Horton include such proposal in its proxy soliciting
materials pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934, as amended, must
deliver a copy of the proposal to D.R. Horton not later than
August 16, 2007. In addition, the Bylaws of D.R. Horton provide
that only stockholder proposals submitted in a timely manner to
a Corporate Counsel of D.R. Horton may be acted upon at an
annual meeting of stockholders. To be timely, a
stockholders notice must be delivered to, or mailed and
received at, the principal executive offices of D.R. Horton not
less than 30 days prior to the date of the originally
scheduled meeting. However, if less than 40 days
notice or prior public disclosure of the date of the originally
scheduled meeting is given by D.R. Horton, 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
originally scheduled meeting was mailed or the day on which such
public disclosure was made.
REQUESTING
DOCUMENTS FROM THE COMPANY
On our website, at www.drhorton.com, under the Investor
Relations and Corporate Governance links, you will find the
following: (i) Corporate Governance Principles,
(ii) Audit Committee Charter, (iii) Compensation
Committee Charter, (iv) Nominating and Governance Committee
Charter, (v) Code of Ethical Conduct for the CEO, CFO, and
Senior Financial Officers, (vi) Complaint Procedures for
Accounting, Internal Control, Auditing and Financial Matters and
Complaint Procedures for Employee Matters, and
(vii) Corporate Code of Business Conduct and Ethics for
Employees and Directors. You may obtain a copy of any of these
documents through our website or by contacting us for a printed
set. You may contact us for these purposes at: Attention
Corporate Counsel, D.R. Horton, Inc., 301 Commerce Street,
Suite 500, Fort Worth, TX 76102,
(817) 390-8200
or e-mail:
tbmontano@drhorton.com.
27
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 as
proxies 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,
Thomas B. Montano
Vice President and Assistant Secretary
Fort Worth, Texas
December 12, 2006
28
APPENDIX
A
D.R.
HORTON, INC.
CORPORATE GOVERNANCE PRINCIPLES
These Corporate Governance Principles, adopted by the Board of
Directors of D.R. Horton, Inc. (the Company or
D.R. Horton which shall include all of the
Companys subsidiaries) together with the charters of the
Audit Committee, the Compensation Committee, and the Nominating
and Governance Committee of the Board, provide the framework for
the governance of D.R. Horton, Inc. The Board will review these
principles and other aspects of D.R. Horton governance at least
annually or as the Board deems necessary or appropriate.
The Board of Directors of the Company is elected by and
responsible to the stockholders of D.R. Horton. D.R.
Hortons business is conducted by its employees, managers
and officers, under the direction of the Chief Executive Officer
(the CEO) and the oversight of the Board, to enhance
the long-term value of the Company for its stockholders. The
Board of Directors monitors the performance of the CEO and
senior management to assure that the long-term interests of the
stockholders are being served.
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II.
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Board of
Directors Structure and Operations/Board Compensation
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Selection
Process and Size of Board
The directors are elected each year by the stockholders at the
annual meeting of stockholders. The Board will consider nominee
recommendations from the Nominating and Governance Committee,
and thereafter the Board will propose a slate of nominees to the
stockholders for election to the Board. The Board also
determines the number of directors on the Board as such number
is provided for in the Bylaws of the Company. Between annual
stockholder meetings, the Board may elect directors to vacant
Board positions to serve until the next annual meeting in a
manner consistent with its Bylaws & Delaware law.
Qualifications
Directors should possess the highest personal and professional
ethical standards, integrity and values, and be committed to
representing the long-term interests of the stockholders.
Directors should also have practical wisdom and mature judgment.
Directors should be objective and inquisitive. Directors should
be prepared to offer their resignation in the event of any
significant change in their personal circumstances that could
affect the discharge of their responsibilities as directors of
the Company, including a change in their principal job
responsibilities. Ordinarily, directors who also serve as CEOs
or in equivalent positions for other companies should not serve
on more than one other board of a public company in addition to
the D.R. Horton board, and other directors should not serve on
more than two other boards of public companies in addition to
the D.R. Horton board.
Because of the value the Board places on having directors who
are knowledgeable about the Company and its operations, the
Board does not believe that arbitrary term limits on
directors service are appropriate.
Election
of Directors
In an uncontested election of directors (i.e., an election where
the only nominees are those recommended by the Board), any
nominee who receives a greater number of votes
withheld from his or her election than votes
for his or her election (Majority
Withheld Vote) will promptly tender his or her resignation
to the Chairman of the Board following certification of the
stockholder vote.
The Nominating and Governance Committee will within a reasonable
period of time consider the resignation submitted by a director
receiving a Majority Withheld Vote and recommend to the Board
whether to accept the tendered resignation. In considering
whether to accept the resignation, the Nominating and Governance
Committee will consider all factors deemed relevant by members
of the Committee, including, without limitation, the underlying
reasons for the Majority Withheld Vote (if ascertainable), the
length of
A-1
service and qualifications of the director whose resignation has
been tendered, the directors contributions to the Company,
continued compliance with New York Stock Exchange listing
standards, and the Companys Corporate Governance
Guidelines.
The Board will act on the Nominating and Governance
Committees recommendation within a reasonable period of
time. In considering the Nominating and Governance
Committees recommendation, the Board will consider the
factors considered by the Committee and such additional
information and factors the Board believes to be appropriate.
Following the Boards decision on the Nominating and
Governance Committees recommendation, the Company will
promptly publicly disclose the Boards decision and process
(including, if applicable, the reasons for rejecting the
tendered resignation) in a periodic or current report filed with
the Securities and Exchange Commission. The Board may also elect
to delay acceptance of a tendered resignation for a specified
period to provide it with an opportunity to address the
underlying stockholder concerns, to recruit a new director or
for any other reasons it deems appropriate.
To the extent that one or more directors resignations are
accepted by the Board, the Nominating and Governance Committee
will recommend to the Board whether to fill such vacancy or
vacancies or to reduce the size of the Board.
Any director who tenders his or her resignation pursuant to this
provision will not participate in the Nominating and Governance
Committee recommendation or Board consideration regarding
whether to accept the tendered resignation. If a majority of the
members of the Nominating and Governance Committee received a
Majority Withheld Vote at the same election, then the
independent directors who are on the Board and who did not
receive a Majority Withheld Vote will appoint a Board committee
amongst themselves solely for the purpose of considering the
tendered resignations and will recommend to the Board whether to
accept or reject them. This Board committee may, but need not,
consist of all of the independent directors who did not receive
a Majority Withheld Vote.
This corporate governance principle will be summarized or
included in each proxy statement relating to an election of
directors of the Company.
Independence
of Directors
A majority of the directors must be independent directors under
the New York Stock Exchange Listed Company rules, which include
the new NYSE corporate governance and independence standards
(collectively, NYSE Rules) or any other applicable
regulatory requirements, as such requirements may change from
time to time. The Board of Directors recognizes, however, that
directors who do not meet the NYSEs independence standards
have historically made, and can be expected to continue to make,
valuable contributions to the Board and to the Company by reason
of their experience, judgment, intelligence and wisdom.
Independence
Standards
To be considered independent under the NYSE Rules, the Board
must determine that a director does not have any direct or
indirect material relationship with the Company or its
management. The Board has established the following independence
standards to assist it in determining director independence in
accordance with the NYSE Rules:
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A director who is an employee or whose immediate family member
is an executive officer of D.R. Horton is not independent
until 3 years after the end of such employment relationship.
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A director who receives, or whose immediate family member
receives, more than $100,000 per year in direct
compensation from D.R. Horton, other than director and committee
fees and pension or other forms of deferred compensation for
prior service (provided such compensation is not contingent in
any way on continued service), is not independent until three
years after he or she ceases to receive more than
$100,000 per year in compensation. Compensation received by
an immediate family member for service as a non-executive
employee or non-member of senior management of D.R. Horton will
not be considered in determining independence under this test.
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A director is not independent if: (A) a director or an
immediate family member is a current partner of a firm that is
D.R. Hortons internal or external auditor; (B) a
director is a current employee of such a firm; (C) a
director has an immediate family member who is a current
employee of such a firm and who participates in the firms
audit, assurance or tax compliance (but not tax planning)
practice; or (D) a director or an immediate family member
was within the last three years (but is no longer) a partner or
employee of such a firm and personally worked on the listed
companys audit within that time.
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A director who is employed, or whose immediate family member is
employed, as an executive officer of another company where any
of D.R. Hortons present executives serve on that
companys compensation committee is not independent until
three years after the end of such service or the employment
relationship.
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A director who is an executive officer or an employee, or whose
immediate family member is an executive officer, of a company
that makes payments to, or receives payments from, D.R. Horton
for property or services in an amount which, in any single
fiscal year, exceeds the greater of $1 million, or 2% of
such other companys consolidated gross revenues, is not
independent until three years after falling below such threshold.
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Transition Rule: In accordance with the NYSE
Rules which were adopted by the SEC on November 4, 2003,
each of the above standards contains a three-year look-back
provision. In order to facilitate a smooth transition to the new
independence standards, the Board, in accordance with the NYSE
Rules, will phase in the look-back provisions by applying a
one-year look-back for the first year after adoption of the new
standards. For example, until November 3, 2004, the Board
will only look-back one year when testing the above standards.
Beginning November 4, 2004, however, the Board would need
to look-back the full three years when testing the above
standards.
Immediate Family Member: For purposes of
analyzing independence, an immediate family
member includes a Board members spouse,
parents, children, siblings, mothers and
fathers-in-laws,
sons and
daughters-in-law,
brothers and
sisters-in-law,
and anyone (other than domestic employees) who shares the Board
members home.
When applying the look-back provisions discussed above, the
Board need not consider individuals who are no longer immediate
family members as a result of legal separation or divorce, or
those who have died or become incapacitated.
Other
Relationships
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If a D.R. Horton director serves as an executive officer,
director or trustee of a charitable or educational organization,
and D.R. Hortons contributions to the organization are
less than $500,000 then the relationship will not be considered
to be a material relationship that would impair a
directors independence.
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The Board, as part of its self-evaluation, will review all
commercial, charitable, and educational relationships between
the Company and its directors. The Boards determination of
each directors independence will be disclosed annually in
the Companys proxy statement.
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For relationships other than those governed by the independence
standards set forth above, the determination of whether the
relationship is material, and therefore whether the director is
independent, shall be made by the Board of Directors.
The Company will not make any personal loans or extensions of
credit to directors or executive officers, other than consumer
loans on terms offered to the general public.
Board
Committees
The Board has established the following Committees to assist the
Board in discharging its responsibilities: (i) Audit,
(ii) Compensation, and (iii) Nominating and
Governance. The current charters of these Committees
A-3
are published on the D.R. Horton public website, and will be
mailed to stockholders on written request. The Committee chairs
report on the matters considered at each of their meetings to
the full Board of Directors following each Committee meeting.
Membership
on the Audit Committee
In addition to the requirement that a majority of the Board
satisfy the independence standards discussed above, members of
the Audit Committee must also satisfy additional independence
and financial literacy requirements. In addition, at least one
member of the Audit Committee shall qualify as an audit
committee financial expert as determined by the Board. The Board
has established the following standards to assist it in
determining whether a Board member who is
independent as set forth above is also independent
for Audit Committee purposes and whether such member is also
financially literate and whether such Board member
qualifies to be the audit committee financial expert
in accordance with applicable NYSE Rules and SEC rules and
regulations:
Audit
Committee Independence
(i) Each member of the Audit Committee must be an
independent member of the Board of Directors using the standards
set fort above in Independence of Directors, and
(ii) In order to be considered independent for purposes of
membership on the Audit Committee, a member of the Audit
Committee may not, other than in his or her capacity as a member
of the Audit Committee, the Board of Directors, or any other
committee of the Board of Directors:
(A) Accept directly or indirectly any consulting, advisory,
or other compensatory fee from the Company or any subsidiary
thereof, provided that, the NYSE Rules provide otherwise,
compensatory fees do not include the receipt of fixed amounts of
compensation under a retirement plan (including deferred
compensation) for prior services with D.R. Horton (provided that
such compensation is not contingent in any way on continued
service); or
(B) Be an affiliated person of D.R. Horton or any
subsidiary thereof. The term affiliate of, or a
person affiliated with, a specified person, means a
person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under the
common control with, the person specified.
The term indirect acceptance by a member of the
Audit Committee of any consulting, advisory or other
compensatory fee includes acceptance of such a fee by a
members spouse, a minor child or stepchild or a child or
stepchild sharing a home with a member or by an entity in which
such a member is a partner, member, an officer, person occupying
a comparable position such as a managing director or executive
officer, or occupies a similar position (except limited
partners, non managing members and those occupying similar
positions who, in each case, have no active role in providing
services to the entity) and which provides accounting,
consulting, legal, investment banking or financial advisory
services to the Company or any of its subsidiaries.
The Board may determine that a member of the Audit Committee is
independent based on an exemption if such exemption has been
adopted by the NYSE or the SEC as applicable. Any independence
determinations based on an exemption will be disclosed in D.R.
Hortons proxy statement.
Audit
Committee Financial Literacy
Each member of the Audit Committee must be financially
literate, as such qualification is interpreted by D.R.
Hortons Board of Directors in its business judgment, or
must become financially literate within a reasonable period of
time after his or her appointment to the Audit Committee. In
determining a members financial literacy, among other
things such as education and professional experience, the Board
will consider the members ability to read and understand
fundamental financial statements, including D.R. Hortons
balance sheet, income statement and cash flow statement as well
as a members understanding of the overall financial
reporting process relating to public companies.
A-4
Audit
Committee Financial Expert
Item 401(h) of
Regulation S-K
of the Securities Act of 1933 requires D.R. Horton to disclose
in its annual proxy statement the name of the person, if any,
the Board of Directors determines to be the audit
committee financial expert (defined below) serving on its
Audit Committee and whether the person is independent, or if the
Company does not have such an audit committee financial
expert serving on its Audit Committee, the reason why it
does not must be disclosed.
An audit committee financial expert,
as defined by SEC rules and regulations, is a person who has
all of the attributes listed below. Accordingly, the
Board of Directors has adopted the following standards to aid it
in making the determination of whether or not a member of the
Audit Committee qualifies as an audit committee financial expert:
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does the member have an understanding of generally accepted
accounting principles and financial statements (the level of
understanding will be analyzed using the means set forth in
(a) through (d) below);
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does the member have the ability to assess the general
application of such principles in connection with the accounting
for estimates, accruals and reserves (the level of understanding
will be analyzed using the means set forth in (a) through
(d) below);
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does the member have experience preparing, auditing, analyzing
or evaluating financial statements that present a breadth and
level of complexity of accounting issues that are generally
comparable to the breadth and complexity of issues that can
reasonably be expected to be raised by the Companys
financial statements, or experience actively supervising one or
more persons engaged in such activities (the level of
understanding will be analyzed using the means set forth in
(a) through (d) below);
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does the member have an understanding of internal control over
financial reporting (the level of understanding will be analyzed
using the means set forth in (a) through
(d) below); and
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does the member have an understanding of audit committee
functions (the level of understanding will be analyzed using the
means set forth in (a) through (d) below).
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The audit committee financial expert
must have acquired the above listed attributes through
any of the following means:
(a) education and experience as a principal financial
officer, principal accounting officer, controller, public
accountant or auditor or experience in one or more positions
that involve the performance of similar functions;
(b) experience actively supervising a principal financial
officer, principal accounting officer, controller, public
accountant or auditor or person performing similar functions;
(c) experience overseeing or assessing the performance of
companies or public accountants with respect to the preparation,
auditing or evaluation of financial statements; or
(d) other relevant experience (if an audit committee
financial expert qualifies as such because of other
relevant experience, then the Company will include
disclosure in its proxy statement providing a brief listing of
that persons relevant experience).
Compensation
of Directors
The Board shall have the responsibility for setting and
approving compensation for non-employee directors in their
capacity as board members or board committee members. Each year,
the Board shall review non-employee director compensation.
A-5
Director
Orientation and Continuing Education
The Company shall provide an orientation for new directors, and
shall periodically provide informational and educational
materials or briefing sessions for all directors on subjects
that would assist them in discharging their duties.
Access
to Senior Management
Each director shall have full and complete access to the
executive officers and senior managers of the Company and, if
desired, without the supervisors of such executive officers and
senior managers present.
Access
to Independent Advisors
The Board and its Committees shall have the right at any time to
retain independent outside financial, legal or other advisors at
the Companys expense.
The Board of Directors ordinarily has 4 scheduled in person
meetings a year. Directors ordinarily are expected to attend all
scheduled Board and Committee meetings, and are expected to
review the materials provided to them in advance of each meeting.
Before, during or after each regularly scheduled Board meeting,
the non-employee directors ordinarily will meet for a period of
time without management present. The Chairman of the Nominating
and Corporate Governance Committee shall preside over such
non-employee director sessions and also will serve as the
presiding director in performing such other functions as the
Board may direct. The non-employee directors may meet without
management present at such other times as determined by the
presiding director or at the request of any non-employee
director. The presiding director will, from time to time, and
following consultation with the Chairs of the Committees of the
Board and the other directors, discuss with the Chairman of the
Board of Directors potential items for inclusion in the agendas
of future meetings of the Board of Directors.
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IV.
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Responsibilities
and Duties
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CEO/Management
Oversight and Compensation
In addition to the Boards general oversight of the CEO and
senior management, the Board also is responsible for:
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selecting, evaluating and compensating the CEO and overseeing
CEO succession planning;
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providing counsel and oversight on the selection, evaluation,
development and compensation of the senior officers of the
Company; and
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approving and maintaining a succession plan for the CEO and
other key senior executives, including an emergency succession
plan for the CEO.
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Business,
Product and Strategic Matters/Compliance with Law and Company
Policy
As part of its overall responsibility to serve the long-term
interests of the stockholders, the Board also shall:
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review, approve and monitor fundamental financial and business
strategies and major Company actions;
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review and discuss reports by management on the performance of
the Company, its plans, products and prospects;
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A-6
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assess major risks facing the Company and review and approve
strategies for addressing such risks; and
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ensure processes are in place for maintaining the integrity and
reputation of the Company, the integrity of the financial
statements, compliance with law and Company policy, the
integrity of relationships with customers, vendors and
suppliers, and the integrity of relationships with other Company
stakeholders.
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Concern
Reporting
Any person who has a legitimate concern about the Companys
conduct may contact the presiding
non-management
director by writing to: presiding director, c/o Corporate
Counsel, D.R. Horton Tower, 301 Commerce Street,
Suite 500, Fort Worth, Texas 76102. The status of all
outstanding concerns addressed to the presiding director will be
reported to the directors as appropriate, on a quarterly basis.
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V.
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Annual
Performance Evaluation
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The members of the Board will perform an annual self-evaluation
of the Board and each of the Committees. Each of the directors
will be requested to provide his or her assessment of the
effectiveness of the Board and the Committees. If determined by
the Board to be desirable, the Board may retain independent
corporate governance experts to assist the Board with the
evaluations.
A-7
APPENDIX
B
D.R.
HORTON, INC.
AMENDED AND RESTATED CHARTER
OF THE
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The purpose of the Audit Committee (the Committee)
of the Board of Directors (the Board) of
D.R. Horton, Inc. (the Company) is to assist
the Board in fulfilling its oversight responsibilities relating
to the:
1. integrity of the Companys financial statements;
2. Companys compliance with legal and regulatory
requirements;
3. independent auditors qualifications and
independence; and
4. performance of the Companys internal audit
function and independent auditors;
and to prepare an audit committee report as required by
Securities and Exchange Commission (SEC) rules to be
included in the Companys annual proxy statement.
The Committee shall consist of at least three persons, all of
whom are members of the Board. Each member of the Committee
shall satisfy the independence requirements set forth in
(i) Section 10A(m) of the Securities Exchange Act of
1934, as amended (the Exchange Act), and the rules
adopted by the SEC thereunder, and (ii) the corporate
governance and other listing standards of the New York Stock
Exchange (the NYSE) as in effect from time to time
(the NYSE Standards).
Each member of the Committee shall be financially
literate within the meaning of the NYSE Standards, as such
term is interpreted by the Board in its business judgment (or
shall become financially literate within a
reasonable period of time after appointment to the Committee).
In addition, at least one member of the Committee shall have
accounting or related financial management expertise
within the meaning of the NYSE Standards, as such term is
interpreted by the Board in its business judgment. Furthermore,
unless the Board determines that it is not necessary for an
audit committee financial expert to serve on the
Committee, at least one member of the Committee shall meet the
requirements to be an audit committee financial
expert within the meaning of Item 401(h) of
Regulation S-K.
No member of the Committee shall serve as a member of the audit
committee of more than two public companies other than the
Company.
The Board shall elect the members of the Committee at the Board
meeting (Annual Board Meeting) that is held
immediately after the annual meeting of the stockholders of the
Company, after considering the recommendations of the Corporate
Governance and Nominating Committee of the Board, and each
Committee member shall serve until the date of the next Annual
Board Meeting, unless he or she resigns, is removed or replaced
or otherwise ceases to be a director or a member of the
Committee prior to such date, in which event the Board may
appoint another director of the Company to fill the resulting
vacancy for his or her unexpired term. Furthermore, if for any
reason the Board does not elect the members to the Committee at
an Annual Board Meeting, the directors who then comprise the
Committee will continue to serve as members of the Committee
until the Board takes action to elect new members of the
Committee. The Board may remove or replace a member of the
Committee at any time.
B-1
The Board shall elect one member of the Committee to act as
chairperson of the Committee (the Chairperson). Such
member shall act as Chairperson until the next Annual Board
Meeting unless he or she resigns, is removed or replaced or
otherwise ceases to be a director or a member of the Committee
prior to such date, in which event the Board shall appoint
another member of the Committee to serve as Chairperson for his
or her unexpired term. The Chairperson shall preside over all
meetings of the Committee. In addition, the Chairperson shall
periodically report the Committees findings and
conclusions to the Board. The Board may remove or replace the
Chairperson at any time.
A majority of the members shall constitute a quorum, unless the
Committee is comprised of an even number of members, in which
case one-half of the members of the Committee shall constitute a
quorum. The act of a majority of the members of the Committee in
attendance at a meeting at which a quorum is present shall
constitute an act of the Committee.
The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. The Chairperson shall
prepare
and/or
approve an agenda in advance of each meeting. The Committee may
invite such persons in addition to the members of the Committee
that it deems appropriate to attend all or part of any meeting.
The Committee shall maintain minutes of its meetings and written
records of its actions. The Committee shall be authorized to
meet, as frequently as it determines is necessary or
appropriate, with the Companys director of internal audit,
the Chief Financial Officer of the Company and the independent
auditor of the Company in separate executive sessions to discuss
any matters that the Chairperson or any other member of the
Committee believes should be discussed.
To the extent permitted by the NYSE Standards and applicable
legal requirements, the Committee may delegate specified duties
and responsibilities to a subcommittee created by a vote of a
majority of the members of the Committee. Each subcommittee
shall have one or more members designated by the Committee, and
shall be governed by such procedures as the Committee shall
determine from time to time.
The Committee may establish such rules as it determines to be
necessary or appropriate to conduct its business, so long as
such rules do not contravene the express provisions of this
Charter.
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IV.
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Duties
and Responsibilities
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A. General. The Committee shall
provide such assistance as the Board shall request in connection
with the general oversight of the Companys financial
reporting, legal and regulatory compliance, internal control and
audit functions.
B. Independent Accountants. The
Committee, as a committee of the Board, is directly responsible
for the selection, appointment, compensation, evaluation,
retention and oversight of the work of any independent auditors
engaged (including resolution of any disagreements between
management and the auditors regarding financial reporting) for
the purpose of preparing or issuing an audit report or related
work or performing other audit, review or attest services for
the Company, and such independent auditors shall report directly
to the Committee. Without limiting the foregoing, the Committee
shall have the duty and responsibility to:
1. select, appoint, evaluate, retain, terminate and replace
the Companys independent auditors (subject, if the
Committee so determines, to shareholder ratification), including
ensuring the rotation of the lead audit partner having primary
responsibility for the audit and the audit partner responsible
for reviewing the audit as required by SEC and NYSE rules,
regulations and standards;
2. obtain and review, at least annually, a report by the
Companys independent auditors describing: the firms
internal quality-control procedures; any material issues raised
by the most recent internal quality-control review, or peer
review, of the firm, or by any inquiry or investigation by
governmental or professional authorities within the preceding
five years, respecting one or more independent audits carried
out by the firm, and any steps taken to deal with any such
issues. The independent auditors shall also confirm that they
are registered with the Public Company Accounting Oversight
Board;
B-2
3. ensure that the independent auditors submit on a
periodic basis to the Committee a formal written statement
delineating all relationships between the auditors and the
Company and actively engage in a dialogue with the auditors with
respect to any disclosed relationships or services that may
impact the objectivity and independence of the auditors and
recommend that the Board take appropriate action in response to
the reports from the auditors to satisfy itself of the
auditors independence;
4. review any report made by the Companys independent
auditors pursuant to Section 10A(k) of the Exchange Act
(critical accounting policies, potential alternative treatments
and material written communications between the independent
auditors and management);
5. discuss the annual audited financial statements and
quarterly financial statements of the Company and other
significant financial disclosures with management and the
independent auditors of the Company, including (a) the
Companys disclosures under Managements
Discussion and Analysis of Financial Condition and Results of
Operations, (b) an analysis of the auditors
judgment as to the quality of the Companys accounting
principles, setting forth significant financial reporting issues
and judgments made in connection with the preparation of the
financial statements, (c) major issues regarding the
Companys accounting principles and financial statement
presentations, including any significant changes in the
Companys selection or application of accounting principles
and financial statement presentations and (d) any other
matters required to be reviewed under applicable legal,
regulatory or NYSE requirements;
6. review with management and the independent auditor the
results of the audit, including any difficulties encountered and
any restrictions on the scope of the auditors activities
or access to requested information;
7. resolve any disagreements between management and the
Companys independent auditors regarding financial
reporting; and
8. pre-approve all audit engagement fees and terms and
pre-approve all permissible non-audit services provided to the
Company by its independent auditors (subject to the de
minimus exceptions for certain non-audit services set forth
in Section 10A(i)(1)(B) of the Exchange Act); provided that
the Committee may delegate to one or more subcommittees the
authority to grant approvals of audit and permitted non-audit
services.
C. Complaints. The Committee shall
establish procedures for (i) the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters,
and (ii) the confidential, anonymous submission by
employees of the Company of concerns regarding questionable
accounting or auditing matters.
D. Other Responsibilities. It
shall be the additional duty and responsibility of the Committee
to:
1. discuss earnings press releases to be issued by the
Company, as well as financial information and earnings guidance
provided to analysts and to rating agencies. This discussion may
be general (i.e., the type of information to be disclosed and
the type of presentation to be made) and the Committee does not
need to discuss each release or presentation in advance;
2. as appropriate, retain and obtain advice and seek
assistance from independent legal, accounting or other advisors;
3. review managements internal control report and the
independent auditors attestation related thereto;
4. review disclosures made by the Chief Executive Officer
and Chief Financial Officer during the
Form 10-K
and
Form 10-Q
certification process regarding significant deficiencies in the
design or operation of internal controls or any fraud that
involves management or employees who have a significant role in
the Companys internal controls;
5. discuss policies with respect to risk assessment and
risk management;
6. periodically meet separately with management, internal
auditors and independent auditors;
B-3
7. review and discuss with the principal internal auditor
of the Company the scope of the internal audit plan, including
any recommended changes in the planned scope, and a summary of
the results of the audits performed;
8. prepare the report that is required to be included in
the Companys annual proxy statement in accordance with SEC
rules;
9. set clear hiring policies for employees or former
employees of the independent auditors;
10. when requested by the Board, Chief Executive Officer or
the chief legal officer of the Company, review with the Board,
Chief Executive Officer or the chief legal officer legal,
disclosure or other matters that may have a material effect on
the financial condition or results of operations of the Company
or its compliance policies; and
11. report regularly to the Board.
E. Certain limitations. It is the
responsibility of the Companys management to prepare
consolidated financial statements that are complete and accurate
and in accordance with generally accepted accounting principles.
It is the responsibility of the Companys independent
auditors to audit those financial statements. The
Committees responsibility in this regard is one of
oversight and review. The Committee does not provide any expert
or other special assistance as to such financial statements.
Although the Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Committee to
initiate or conduct investigations unless directed to do so by
the Board, or to assure compliance with applicable laws and
regulations or the Companys policies and procedures.
Furthermore, the manner in which such responsibilities and
powers are to be exercised should be determined by the Committee
in light of the circumstances and conditions existing from time
to time. In many cases, the Committee will discharge its
responsibilities by evaluating information and reports presented
or otherwise given to the Committee by the Companys
management, internal auditors and independent accountants.
Members of the Committee are not required to assume the
functions or responsibilities of full-time employees of the
Company or of experts in the fields of accounting or auditing.
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V.
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Engagement
of Advisors Funding
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The Committee shall have the authority to engage independent
counsel and other advisors, as it determines to be necessary to
carry out its duties. The Committee shall have the authority to
approve and authorize the payment by the Company of appropriate
compensation (i) to any independent auditors engaged for
the purpose of rendering or issuing an audit report or related
work or performing other audit, review or attest services for
the Company, and (ii) any counsel or other advisors
employed by the Committee as provided above.
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VI.
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Annual
Performance Evaluation of the Committee
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The Board shall conduct an annual performance evaluation of the
Committee. This evaluation will be conducted by the Board in one
or more separate sessions at which members of the Committee
shall not be in attendance. After completing its annual
performance evaluation of the Committee, the Board or a
representative thereof shall review such evaluation or a summary
thereof with the members of the Committee.
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VII.
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Review
and Reassessment of the Charter
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The Committee shall review and reassess at least annually the
adequacy of this Charter and shall recommend any changes it
deems appropriate to the Board.
B-4
D.R. HORTON, INC. 2007 PROXY
PROXY
D.R. HORTON, INC.
D.R. Horton Tower, 301 Commerce Street, Suite 500, Fort Worth, Texas 76102
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominates, constitutes and appoints Donald R. Horton, Donald J. Tomnitz
and Bill W. Wheat, 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 on
the reverse side of this card, 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 1, 2006, at the Annual
Meeting of Stockholders to be held on January 25, 2007, or any adjournment thereof.
PLEASE SIGN AND DATE ON REVERSE SIDE.
Please mark your votes as in this example.
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FOR all nominees
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WITHHOLD |
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listed at right (except
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AUTHORITY |
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as marked to the
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to vote for all nominees
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Nominees:
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Donald R. Horton |
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contrary below)
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listed at right.
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Bradley S. Anderson |
1.
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Election of
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Michael R. Buchanan |
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Directors
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Richard I. Galland |
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Michael W. Hewatt |
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Donald J. Tomnitz |
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Bill W. Wheat |
(INSTRUCTION: To withhold authority to vote for any individual
nominee write that nominees name in the space provided below.)
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FOR
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AGAINST
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ABSTAIN |
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2.
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To vote on a shareholder proposal concerning a |
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majority vote standard for the election of directors.
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3.
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To conduct other business properly brought before |
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the meeting.
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The board of directors recommends a vote FOR all nominees to the board of directors. The board
of directors recommends a vote AGAINST Proposal 2. 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 as recommended by the board of directors in this paragraph.
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.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE.
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(Signature)
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(Signature)
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Dated: |
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Note: 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 an authorized person.