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