DEF 14A of Horton D R Inc /De/, Dec 14, 2018

DEF 14A of Horton D R Inc /De/

Filed Dec 14, 2018 · FY20180001193125-18-350016

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS Our Board of Directors currently consists of five members who were elected at the 2018 Annual Meeting and will serve until the 2019 Annual Meeting and until their successors have been elected and qualified. The Nominating and Governance Committee recommended to the Board of Directors our five directors as director nominees, each of whom is listed below under the heading “Nominees for Director.” After review and consideration by the Board of Directors, the Board nominated Donald R. Horton, Barbara K. Allen, Brad S. Anderson, Michael R. Buchanan and Michael W. Hewatt, as recommended by the Nominating and Governance Committee, for election as directors of D.R. Horton at the 2019 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. Nominees who are elected as directors 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. We do not know of any reason why any of the nominees would be unable to serve. However, if any of the nominees is unable to serve or for good cause will not serve as a director at the time of the 2019 Annual Meeting, the Board may designate a substitute nominee or reduce the size of the Board. If the Board designates a substitute nominee, the persons named as proxies may vote “FOR” that substitute nominee. The D.R. Horton Bylaws require that to be elected, a director nominee must receive a majority of the votes cast with respect to such nominee in uncontested elections (the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee). In a contested election, where the number of nominees exceeds the number of directors to be elected (which is not the case at the 2019 Annual Meeting), the directors will be elected by a plurality of the shares present in person or by proxy and entitled to vote on the election of directors. Under the Corporate Governance Principles of the Company, any director who is not elected is required to tender his or her resignation to the Chairman of the Board within a reasonable time following certification of the vote. The Nominating and Governance Committee, which is composed of only independent directors, will consider the resignation offer and make a recommendation to the Board as to whether to accept or reject the resignation offer, or whether other action should be taken. The Board will act on the Nominating and Governance Committee’s recommendation within 90 days following certification of the election results. Thereafter, the Board will promptly publicly disclose in a report filed with the Securities and Exchange Commission (“SEC”) its decision regarding the director’s resignation offer (including the reason(s) for rejecting the resignation offer, if applicable).

  2. The Board of Directors Unanimously Recommends that Stockholders Vote “FOR”

    The Board of Directors Unanimously Recommends that Stockholders Vote “FOR” Each of the Following Director Nominees.

  3. Nominees for Director

    Nominees for Director The following is a summary of certain information regarding the nominees for election as directors. DONALD R. HORTON, age 68, director since 1991. Mr. Horton has been executive Chairman of the Board of D.R. Horton since it was formed in July 1991, and he was President and CEO from July 1991 through November 1998. He has been involved in the real estate and homebuilding industries since 1972, and he was the founder, sole or principal stockholder, director and president of each of D.R. Horton’s predecessor companies since their respective organization, which date from 1978 to 1990. Key Director Qualifications. Mr. Horton’s 40 years of extensive experience in the homebuilding industry provides valuable leadership to the Board and to the Company. Mr. Horton brings to the Board his experience as founder of the Company, Chairman of the Board and former CEO and President of the Company and its predecessor companies. Mr. Horton is also the largest individual stockholder of the Company. As founder of the Company, Mr. Horton has a unique understanding of all phases of the homebuilding business. Mr. Horton’s leadership and strategic vision provide the Board and the Company with distinct advantages in the homebuilding industry. BARBARA K. ALLEN, age 72, director since 2014. Ms. Allen has significant experience researching, analyzing and making investment decisions related to housing-related companies. Ms. Allen retired from Avondale Partners in July 2006 where she was a Partner and Housing, Construction and Retailing Analyst. From February 1997 through December 2004, she was the Home Construction, Building Materials, Home Furnishing and DIY (Do It Yourself) Retailing Analyst for Natexis Bleichroeder, Inc. Ms. Allen was a Vice President, Equity Research for Donaldson, Lufkin & Jenrette from January 1993 through January 1996. She served in other roles at Oppenheimer & Company, Kidder, Peabody, Inc., and Prudential Securities prior to January 1993. Ms. Allen has been a member of the Audit, Compensation and Nominating and Governance Committees since 2014. Key Director Qualifications. Ms. Allen’s extensive experience working as an analyst and consultant with housing-related companies provides valuable knowledge to the Board with regard to strategic decisions, including investment, operating and financing matters. BRAD S. ANDERSON, age 57, director since 1998. Mr. Anderson has been an Executive Vice President of CBRE Group, Inc., formerly CB Richard Ellis, Inc., an international real estate brokerage company, since 2009, 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 is also a member of the Board of Directors and a member of the audit committee of KS StateBank, a private bank. Mr. Anderson has been a member of both our Audit and Compensation Committees since 1998, and he has been a member of the Nominating and Governance Committee since November 2003. Key Director Qualifications. Mr. Anderson’s extensive experience working with an international real estate brokerage company allows him to bring beneficial insight and perspective to the Board, as a number of factors that affect the real estate brokerage industry also affect the homebuilding industry. Mr. Anderson also brings to the Board his valuable experience of formerly serving on another public homebuilding company’s board and serving on the Company’s Board and its Committees since 1998. MICHAEL R. BUCHANAN, age 71, director since 2003. 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 was appointed to our Board’s Audit Committee in July 2003, Nominating and Governance Committee in November 2003 and Compensation Committee in January 2004. Key Director Qualifications. Mr. Buchanan is a highly experienced commercial banker who served the real estate and homebuilding sectors. His experience in these areas allows him to provide the Board with both a broad-based and a granular perspective on the homebuilding industry. Mr. Buchanan also brings his experience of having served on a board of a real estate investment trust, thereby providing the Board with additional perspective on the real estate industry and serving on a board of directors. MICHAEL W. HEWATT, age 69, director since 2005. Mr. Hewatt has significant experience performing auditing and tax services as a certified public accountant. He retired as Principal Officer of Hewatt & Associates, CPAs in 2018, having worked there or at its predecessor firms since 1980. From 1971 to 1979, Mr. Hewatt worked in the tax and audit areas at Coopers & Lybrand (now PricewaterhouseCoopers LLP) and was an audit manager for five years during that period. Mr. Hewatt is a member of the American Institute of Certified Public Accountants, 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 D.R. Horton since 2005 and has been a member of the Audit, Compensation and Nominating and Governance Committees since that time. Key Director Qualifications. Mr. Hewatt has extensive experience working as a certified public accountant for a national and local firm. This experience enables Mr. Hewatt to provide valuable perspective on accounting, auditing and tax matters to the Board and its Committees.

  4. Compensation of Directors

    Compensation of Directors Our Board of Directors approves the annual compensation and fees paid to our non-management directors, each of whom is listed in the “Director Compensation for Fiscal 2018” table. The Board has strived to set non-management director compensation at a reasonable level of cash and equity compensation. The total annual compensation of directors has varied primarily due to the granting of long-term equity awards in certain years. Our Chairman, a member of executive management, does not receive any compensation for serving on the Board of Directors. Director Fees Paid in Cash. In fiscal 2018, each non-management director received $15,000 for each Board meeting attended in person or by telephone conference, paid quarterly and not to exceed $60,000 per year. In addition, each non-management director who served on a committee of the Board of Directors received an annual fee of $5,000 per committee, paid quarterly, and each non-management director who served as the Chairman of a committee of the Board of Directors received an annual fee of $2,500 per committee, paid quarterly. Director Retainer Fees Paid in Restricted Stock Units. In the past, our non-management directors have received retainer fees paid in the form of restricted stock units that vest annually in equal installments over three years. In January 2016, Ms. Allen, Mr. Anderson, Mr. Buchanan and Mr. Hewatt each received 12,000 of such retainer fee restricted stock units. Restricted Stock Units. Each of our non-management directors received a grant of 2,350 restricted stock units in March 2018 as reflected in the Director Compensation table below. These restricted stock units vest ratably over five years. In November 2018, our fiscal year 2019, each of our non-management directors received a grant of 2,350 restricted stock units that vest ratably over five years. In addition, when a new non-management director joins our Board, the Board of Directors may award restricted stock units to the new non-management director. Expenses and Health Care Plan. Each non-management director is entitled to reimbursement for reasonable expenses relating to his or her service on the Board and any committee, including travel, meals and other related expenses. Each non-management director is eligible to participate in the Company’s broad-based health care plan and Ms. Allen, Mr. Anderson, Mr. Buchanan and Mr. Hewatt elected to participate in the plan in fiscal 2018.

  5. Director Compensation for Fiscal 2018

    Director Compensation for Fiscal 2018

  6. Director Compensation for Fiscal 2018

    | Name(1) | Fees Earned or Paid in Cash(2) | Stock Awards(3) | Option Awards(4) | All Other Compensation | Total | | Barbara K. Allen | $75,000 | $98,113 | — | — | $173,113 | | Brad S. Anderson | $77,500 | $98,113 | — | — | $175,613 | | Michael R. Buchanan | $77,500 | $98,113 | — | — | $175,613 | | Michael W. Hewatt | $77,500 | $98,113 | — | — | $175,613 |

  7. Director Compensation for Fiscal 2018

    | The Company pays director fees only to non-management directors.(1) |

  8. Director Compensation for Fiscal 2018

    | Amounts represent non-management director fees paid in cash during fiscal 2018.(2) |

  9. Director Compensation for Fiscal 2018

    | Amount represents the grant date fair value of $41.75 per unit for the 2,350 restricted stock units granted to each non-management director on March 7, 2018. The grant date fair value of the restricted stock units was determined in accordance with accounting guidance for share-based payments. The Company recognizes expense for these awards over the five-year vesting period.(3) |

  10. Director Compensation for Fiscal 2018

    As of September 30, 2018, each non-management director held the following number of unvested restricted stock units:

  11. Director Compensation for Fiscal 2018

    | Name | Unvested Restricted Stock Units | | Barbara K. Allen | 9,922 | | Brad S. Anderson | 9,922 | | Michael R. Buchanan | 9,922 | | Michael W. Hewatt | 9,922 |

  12. Director Compensation for Fiscal 2018

    | The non-management directors did not receive stock option awards during fiscal 2018, fiscal 2017 or fiscal 2016. As of September 30, 2018, each non-management director held the following number of outstanding vested and unvested stock options:(4) |

  13. Director Compensation for Fiscal 2018

    | | Outstanding Stock Options | | | Name | Vested | Unvested | | Barbara K. Allen | — | 1,667 | | Brad S. Anderson | 30,000 | — | | Michael R. Buchanan | 5,000 | — | | Michael W. Hewatt | 8,000 | — |

  14. Overview

    Overview Our Compensation Committee strives to design a fair and competitive compensation program for executive officers that will attract, motivate and retain highly qualified and experienced executives, reward superior performance and provide incentives that are based on the performance of the Company, with an overall emphasis on maximizing our long-term stockholder value. Our executive compensation program consists of several components, including base salaries, cash bonuses, performance-based equity awards, time-based equity awards, deferred compensation plans and retirement benefits. This compensation discussion and analysis provides information regarding our compensation objectives, the relationship between the components of our compensation program and our objectives, and factors considered by the Compensation Committee in establishing compensation levels for our named executive officers. Our fiscal 2018 named executive officers are:

  15. Fiscal 2018 – Outline of Executive Compensation Actions

    Fiscal 2018 – Outline of Executive Compensation Actions For fiscal 2018, the Compensation Committee took actions on matters related to executive compensation as outlined below. These executive compensation components are discussed in more detail under the referenced headings in this “Compensation Discussion and Analysis” section. Base Salaries – The Board and Compensation Committee set and paid base salaries. See the heading “Base Salaries – Named Executive Officers” on page 26. Short-Term Incentive Bonuses – The Compensation Committee established and approved annual short-term incentive bonuses for Mr. Horton, Mr. Auld and Mr. Murray based on semi-annual pre-tax income. For fiscal 2018, Mr. Horton was eligible to earn a maximum short-term incentive bonus of 0.6% of pre-tax income, which resulted in cash payments to him of $5,016,391 for the semi-annual period ended March 31, 2018 and $7,343,401 for the semi-annual period ended September 30, 2018, for a total incentive bonus of $12,359,792. For fiscal 2018, Mr. Auld was eligible to earn a maximum short-term incentive bonus of 0.4% of pre-tax income, which resulted in cash payments to him of $3,344,261 for the semi-annual period ended March 31, 2018 and $4,895,601 for the semi-annual period ended September 30, 2018, for a total incentive bonus of $8,239,862. For fiscal 2018, Mr. Murray was eligible to earn a maximum short-term incentive bonus of 0.15% of pre-tax income, which resulted in cash payments to him of $1,254,098 for the semi-annual period ended March 31, 2018 and $1,835,850 for the semi-annual period ended September 30, 2018, for a total incentive bonus of $3,089,948. Mr. Wheat was paid cash discretionary bonuses for the semi-annual periods ended March 31, 2018 and September 30, 2018 in the amounts of $500,000 and $1,000,000, respectively, for a total incentive bonus of $1,500,000. See the headings “2018 Fiscal Year – Annual Incentive Bonus” on page 27 and “2018 Fiscal Year – Annual Incentive Bonus Results and Payout” on page 28. Long-Term 2021 Performance and Time-Based Restricted Stock Units (RSUs) – In November 2018, the Compensation Committee granted to Mr. Horton, Mr. Auld, Mr. Murray and Mr. Wheat Performance RSUs that vest based on performance against four goals over the three-year performance period beginning October 1, 2018 and ending September 30, 2021. Mr. Horton was awarded a target amount of 200,000 Performance RSUs, Mr. Auld was awarded a target amount of 100,000 Performance RSUs, and Mr. Murray and Mr. Wheat were each awarded a target amount of 30,000 Performance RSUs. See the heading “2019 Fiscal Year – Award of 2021 Performance Restricted Stock Units – Potential Vesting at September 30, 2021” on page 39. Long-Term Restricted Stock Units – The Compensation Committee approved and granted time-based vesting RSUs to our executive officers and key employees in fiscal 2018 and fiscal 2019. See the headings “2018 Fiscal Year – Award of Restricted Stock Units – Time-Based Vesting” on page 38 and “2019 Fiscal Year –Award of Restricted Stock Units – Time-Based Vesting” on page 39. Settlement of Long-Term 2018 Performance Restricted Stock Units (RSUs) – Based on the Company’s performance during the three-year period from October 1, 2015 to September 30, 2018, Mr. Horton earned 212,500 shares of common stock (106.25% of target), Mr. Auld earned 106,250 shares of common stock (106.25% of target) and Mr. Murray earned 31,875 shares of common stock (106.25% of target). For additional information on the 2018 Performance RSUs, which were granted in fiscal 2016, see the heading “2018 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2018” on page 29.

  16. Executive Compensation Objectives

    | • | award compensation that recognizes valuable short and long-term individual performance as well as the Company’s overall performance; and |

  17. Executive Compensation Objectives

    | • | align our executives’ interests with those of our stockholders with the goal of maximizing long-term stockholder value. |

  18. Use of Compensation Peer Group Data

    Use of Compensation Peer Group Data The Compensation Committee utilizes compensation data from our peer group of publicly-traded homebuilding companies to analyze compensation decisions in light of current market conditions and practices and to ensure that our compensation decisions are reasonable in comparison to our peer group and the value of our executives to the Company. However, the Compensation Committee does not attempt to position compensation at any specified level or ranking within our peer group. In fiscal 2018, the peer group compensation data was compiled by the Compensation Committee Chairman and the Company’s Corporate Counsel and Secretary using information from Equilar’s database and from the data in executive compensation discussions and tables in publicly filed proxy statements. When determining peer group averages, rankings and medians, we include our Company and each company in our peer group in the rankings and computations. Our peer group may change from year to year based on the discretion of the Compensation Committee or other events such as mergers and acquisitions. Our Compensation Committee considers factors such as market capitalization, competition in our markets and mergers and consolidations when determining our peer group. For fiscal 2018, our peer group consisted of the following publicly-traded homebuilding companies that had market capitalizations ranging from approximately $1.6 billion to $15.1 billion at September 30, 2018. Our market capitalization on that date was $15.9 billion.

  19. Use of Compensation Peer Group Data

    | Peer Group | | | KB Home | PulteGroup | | Lennar | Taylor Morrison | | M.D.C. Holdings | Toll Brothers | | Meritage Homes | TRI Pointe Group | | NVR | |

  20. Use of Compensation Peer Group Data

    CalAtlantic Group was removed from our peer group following its merger with Lennar in February of 2018.

  21. 2018 Fiscal Year – Annual Incentive Bonus

    2018 Fiscal Year – Annual Incentive Bonus Chairman, Chief Executive Officer and Chief Operating Officer. During fiscal 2018, in furtherance of our compensation philosophy to award incentive bonuses based on performance, Mr. Horton, Mr. Auld and Mr. Murray each had the opportunity to earn a performance bonus based on the amount of pre-tax income earned by the Company during the year. “Pre-tax income” means consolidated income before income taxes, as publicly reported by the Company in its consolidated financial statements prepared in accordance with generally accepted accounting principles. This annual incentive bonus incentivizes Mr. Horton, Mr. Auld and Mr. Murray to help the Company generate pre-tax income. The pre-tax income performance goal focuses our executives on improving the components of pre-tax income, namely, increasing revenues and controlling our cost of sales and selling, general and administrative (“SG&A”) expenses. The maximum percentage of pre-tax income that could be earned under the annual incentive bonus opportunity for fiscal 2018 was as follows:

  22. 2018 Fiscal Year – Annual Incentive Bonus

    | | | Maximum Bonus Potential | | | Name | Fiscal 2018 Performance Goal | 1st Semi-Annual Period | 2nd Semi-Annual Period | | Donald R. Horton | Pre-Tax Income | 0.6% | 0.6% | | David V. Auld | Pre-Tax Income | 0.4% | 0.4% | | Michael J. Murray | Pre-Tax Income | 0.15% | 0.15% |

  23. 2018 Fiscal Year – Annual Incentive Bonus

    The 1st semi-annual period was the six months ended March 31, 2018 (first and second quarters of fiscal 2018) and the 2nd semi-annual period was the six months ended September 30, 2018 (third and fourth quarters of fiscal 2018). The hurdle or threshold for achieving an annual incentive bonus was the attainment of pre-tax income. If no pre-tax income was attained, then no bonus would be paid under the annual incentive bonus opportunity. The bonuses paid under this program are paid in cash. At the beginning of fiscal 2018, the Compensation Committee decided to continue to use 0.6% of pre-tax income for Mr. Horton, 0.4% for Mr. Auld and 0.15% for Mr. Murray as the maximum bonus under this performance goal. The Committee’s decision was based on its determination that if the maximum bonus was paid as calculated on estimated projections of the Company’s pre-tax income, the amount would be reasonable in relation to the goal achieved and reasonable in relation to the Company’s goal of containing overall SG&A expense. The percentage chosen for the annual incentive bonus opportunity is not based on any formulaic methodology. For fiscal 2018, the Compensation Committee believed that by using a percentage of pre-tax income, we would incent our Chairman, CEO and COO to achieve higher levels of pre-tax income which aligns their interests with those of our stockholders. By using annual pre-tax income as a performance goal, we balanced the mix of short-term performance period compensation with the long-term performance period compensation of restricted stock units. Because the selection of 0.6%, 0.4% and 0.15% as the maximum percentages was a subjective determination, and not one based on any formulaic method or benchmark other than as described herein, the Compensation Committee maintained the right to use its discretion to adjust downward the amount to be paid for this award. The Compensation Committee did not use its discretion to adjust the bonus payouts for fiscal 2018.

  24. 2018 Fiscal Year – Annual Incentive Bonus Results and Payout

    2018 Fiscal Year – Annual Incentive Bonus Results and Payout The table below sets forth the Company’s pre-tax income (“PTI”) and the annual incentive bonuses paid in cash for fiscal 2018 to Mr. Horton, Mr. Auld and Mr. Murray:

  25. 2018 Fiscal Year – Annual Incentive Bonus Results and Payout

    | | | Donald R. Horton Chairman | | David V. Auld Chief Executive Officer | | Michael J. Murray Chief Operating Officer | | | Semi-Annual Period | PTI | Maximum Bonus Percentage | Bonus Paid | Maximum Bonus Percentage | Bonus Paid | Maximum Bonus Percentage | Bonus Paid | | 1st Semi-Annual Period Ended March 31, 2018 | $836,065,170 | 0.6% | $5,016,391 | 0.4% | $3,344,261 | 0.15% | $1,254,098 | | 2nd Semi-Annual Period Ended September 30, 2018 | $1,223,900,232 | 0.6% | $7,343,401 | 0.4% | $4,895,601 | 0.15% | $1,835,850 | | Annual Amount | $2,059,965,402 | 0.6% | $12,359,792 | 0.4% | $8,239,862 | 0.15% | $3,089,948 |

  26. 2018 Fiscal Year – Annual Discretionary Bonus

    2018 Fiscal Year – Annual Discretionary Bonus Chief Financial Officer – Mr. Wheat. During 2018, the Board of Directors approved discretionary bonuses for Mr. Wheat on a semi-annual basis. For the first semi-annual period ended March 31, 2018, Mr. Wheat received a $500,000 bonus, and for the second semi-annual period ended September 30, 2018, he received a $1,000,000 bonus, for a total bonus of $1,500,000 which was paid in cash. Mr. Wheat’s fiscal 2018 discretionary bonus of $1,500,000 was $200,000 more than the bonuses he received in the prior year. The increase to Mr. Wheat’s bonus was discretionary, but factors considered were the financial and operating performance by the Company in fiscal 2018, which included higher levels of profitability in fiscal 2018 compared to fiscal 2017 and the individual performance of Mr. Wheat in his areas of responsibility. The process of awarding a discretionary bonus to Mr. Wheat included review and consideration by our Chairman and CEO. Our Chairman made a recommendation to the Compensation Committee who then considered the recommendation and made a recommendation to the Board of Directors. The discretionary bonus was not based on specific quantitative formulas, percentages or numerical weightings, but rather was related to subjective evaluations of the Company’s level of profitability relative to the prior year, job performance and the level of retention risk related to the Company’s ability to continue to employ Mr. Wheat as our CFO. The amount of discretionary bonus awarded to Mr. Wheat was not benchmarked or tied to any other performance metrics or pay of similar executives at peer companies, although the Compensation Committee did review the pay of chief financial officers in our peer group. Mr. Wheat’s responsibilities within the Company were considered when determining the amount of his discretionary bonus. As Executive Vice President and CFO, Mr. Wheat works closely with our Chairman, CEO and COO in setting operational and financial strategies for our operations, communicating and implementing such strategies across the Company, analyzing and monitoring the Company’s performance and reviewing and approving investments in land and lots. These operational strategies include our homebuilding and financial services business plans and incentive compensation, land and lot investment criteria, level of homes in inventory, expense levels, capital structure and liquidity goals, among others. Mr. Wheat also provides executive management direction and oversight to the financial services operations and serves as a director on the boards of the Company’s mortgage and insurance subsidiaries. Mr. Wheat has direct responsibility for the Company’s financial management and financial reporting process, including the Company’s financial projections and cash forecasts, the effectiveness and integrity of the Company’s financial, internal and disclosure controls and procedures, and compliance with all applicable financial reporting rules and regulations for public companies. Mr. Wheat is also directly responsible for providing executive management oversight of the Company’s accounting, management reporting, internal audit, finance, treasury, tax, information technology and human resources functions. Additionally, Mr. Wheat is directly involved in the Company’s investor relations process, including interactions with investors in the Company’s equity and debt securities and industry research analysts. He also assists in the executive management oversight of the Company’s public communications, marketing and corporate purchasing functions.

  27. 2018 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2018

    2018 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2018 Chairman, Chief Executive Officer and Chief Operating Officer. In November 2018, Mr. Horton received 212,500 shares of common stock based on a target number of 200,000 performance restricted stock units (“2018 Performance RSUs”) granted in November 2015. Mr. Auld received 106,250 shares of common stock based on a target number of 100,000 2018 Performance RSUs granted. Mr. Murray received 31,875 shares of common stock based on a target number of 30,000 2018 Performance RSUs granted. The performance period for the 2018 Performance RSUs was the three-year period of October 1, 2015 to September 30, 2018 (the “2018 Performance Period”). The 2018 Performance RSUs vested based on the following four performance goals (“Performance Goals”):

  28. 2018 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2018

    | Performance Goal | Performance Comparison | Weighting to Total Award | | Relative TSR | S&P 500 Index TSR | 25% | | Relative ROI | Peer Group | 25% | | Relative SG&A | Peer Group | 25% | | Relative GP | Peer Group | 25% |

  29. 2018 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2018

    | TSR: | means “total shareholder return” (stock price increases and decreases plus dividends) of the Company over the 2018 Performance Period as determined by Standard and Poor’s using the same methodology used by Standard and Poor’s in preparing the stock performance graph included each year in the Company’s Form 10-K. |

  30. 2018 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2018

    | ROI: | means “return on investment” which is consolidated pre-tax income or loss divided by average total assets over the 2018 Performance Period. |

  31. 2018 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2018

    | SG&A: | means consolidated “selling, general and administrative expense” (including corporate general and administrative expenses) as a percentage of consolidated revenues over the 2018 Performance Period. |

  32. 2018 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2018

    | GP: | means “gross profit” defined as homebuilding revenues minus homebuilding cost of sales, including inventory and land option charges, divided by homebuilding revenues over the 2018 Performance Period. |

  33. 2018 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2018

    The following table sets forth the potential performance adjustments that could have been made to the 2018 Performance RSUs based on the final performance rankings of the peer group and the Company.

  34. Donald R. Horton

    | TSR Portion of Award (weighted 25% of target award) | | | | Company TSR Relative to S&P 500 Index TSR | Payout | Number of Performance RSUs Awarded | | Percentage Points Below Index: | | | | 10 Percentage Points | | zero | | 9 Percentage Points | Threshold | 5,000 | | 8 Percentage Points | | 10,000 | | 7 Percentage Points | | 15,000 | | 6 Percentage Points | | 20,000 | | 5 Percentage Points | | 25,000 | | 4 Percentage Points | | 30,000 | | 3 Percentage Points | | 35,000 | | 2 Percentage Points | | 40,000 | | 1 Percentage Point | | 45,000 | | Equal to S&P 500 Index TSR | . Target | 50,000(1) | | Percentage Points Above Index: | | | | 1 Percentage Point | | 55,000 | | 2 Percentage Points | | 60,000 | | 3 Percentage Points | | 65,000 | | 4 Percentage Points | | 70,000 | | 5 Percentage Points | | 75,000 | | 6 Percentage Points | | 80,000 | | 7 Percentage Points | | 85,000 | | 8 Percentage Points | | 90,000 | | 9 Percentage Points | | 95,000 | | 10 Percentage Points | Maximum | 100,000 |

  35. Donald R. Horton

    | ROI, SG&A and GP Portions of Award (each weighted 25% of target award) | | | | Performance Level Compared to Peer Group | Payout | Number of Performance RSUs Awarded | | 11(th) Place | | zero | | 10(th) Place | Threshold | 25,000 | | 9(th) Place | | 50,000 | | 8(th) Place | | 75,000 | | 7(th) Place | | 100,000 | | 6(th) Place | | 125,000 | | 5(th) Place | Target | 150,000(2) | | 4(th) Place | | 187,500 | | 3(rd) Place | | 225,000 | | 2(nd) Place | | 262,500 | | 1(st) Place | Maximum | 300,000 |

  36. David V. Auld

    | TSR Portion of Award (weighted 25% of target award) | | | | Company TSR Relative to S&P 500 Index TSR | Payout | Number of Performance RSUs Awarded | | Percentage Points Below Index: | | | | 10 Percentage Points | | zero | | 9 Percentage Points | Threshold | 2,500 | | 8 Percentage Points | | 5,000 | | 7 Percentage Points | | 7,500 | | 6 Percentage Points | | 10,000 | | 5 Percentage Points | | 12,500 | | 4 Percentage Points | | 15,000 | | 3 Percentage Points | | 17,500 | | 2 Percentage Points | | 20,000 | | 1 Percentage Point | | 22,500 | | Equal to S&P 500 Index TSR | Target | 25,000(1) | | Percentage Points Above Index: | | | | 1 Percentage Point | | 27,500 | | 2 Percentage Points | | 30,000 | | 3 Percentage Points | | 32,500 | | 4 Percentage Points | | 35,000 | | 5 Percentage Points | | 37,500 | | 6 Percentage Points | | 40,000 | | 7 Percentage Points | | 42,500 | | 8 Percentage Points | | 45,000 | | 9 Percentage Points | | 47,500 | | 10 Percentage Points | Maximum | 50,000 |

  37. David V. Auld

    | ROI, SG&A and GP Portions of Award (each weighted 25% of target award) | | | | Performance Level Compared to Peer Group | Payout | Number of Performance RSUs Awarded | | 11(th) Place | | zero | | 10(th) Place | Threshold | 12,500 | | 9(th) Place | | 25,000 | | 8(th) Place | | 37,500 | | 7(th) Place | | 50,000 | | 6(th) Place | | 62,500 | | 5(th) Place | Target | 75,000(2) | | 4(th) Place | | 93,750 | | 3(rd) Place | | 112,500 | | 2(nd) Place | | 131,250 | | 1(st) Place | Maximum | 150,000 |

  38. Michael J. Murray

    | TSR Portion of Award (weighted 25% of target award) | | | | Company TSR Relative to S&P 500 Index TSR | Payout | Number of Performance RSUs Awarded | | Percentage Points Below Index: | | | | 10 Percentage Points | | zero | | 9 Percentage Points | Threshold | 750 | | 8 Percentage Points | | 1,500 | | 7 Percentage Points | | 2,250 | | 6 Percentage Points | | 3,000 | | 5 Percentage Points | | 3,750 | | 4 Percentage Points | | 4,500 | | 3 Percentage Points | | 5,250 | | 2 Percentage Points | | 6,000 | | 1 Percentage Point | | 6,750 | | Equal to S&P 500 Index TSR | Target | 7,500(1) | | Percentage Points Above Index: | | | | 1 Percentage Point | | 8,250 | | 2 Percentage Points | | 9,000 | | 3 Percentage Points | | 9,750 | | 4 Percentage Points | | 10,500 | | 5 Percentage Points | | 11,250 | | 6 Percentage Points | | 12,000 | | 7 Percentage Points | | 12,750 | | 8 Percentage Points | | 13,500 | | 9 Percentage Points | | 14,250 | | 10 Percentage Points | Maximum | 15,000 |

  39. Michael J. Murray

    | ROI, SG&A and GP Portions of Award (each weighted 25% of target award) | | | | Performance Level Compared to Peer Group | Payout | Number of Performance RSUs Awarded | | 11(th) Place | | zero | | 10(th) Place | Threshold | 3,750 | | 9(th) Place | | 7,500 | | 8(th) Place | | 11,250 | | 7(th) Place | | 15,000 | | 6(th) Place | | 18,750 | | 5(th) Place | . Target | 22,500(2) | | 4(th) Place | | 28,125 | | 3(rd) Place | | 33,750 | | 2(nd) Place | | 39,375 | | 1(st) Place | Maximum | 45,000 |

  40. Michael J. Murray

    As set forth in the rankings tables above, the target number of 2018 Performance RSUs could have been increased to a maximum of 400,000 for Mr. Horton, 200,000 for Mr. Auld and 60,000 for Mr. Murray upon maximum achievement of each of the four Performance Goals and decreased to a minimum of zero for Mr. Horton, Mr. Auld and Mr. Murray in the event of below threshold achievement of each of the four Performance Goals. For the 2018 Performance RSUs, the Company’s peer group consisted of the following publicly-traded homebuilding companies: Beazer Homes USA, Hovnanian Enterprises, KB Home, Lennar, M.D.C. Holdings, Meritage Homes, NVR, PulteGroup, and Toll Brothers. When the 2018 Performance RSUs were granted, CalAtlantic Group was included in the peer group. When CalAtlantic Group merged into Lennar in February 2018, they were removed from the peer group. Each 2018 Performance RSU represented the contingent right to receive one share of common stock if vesting was satisfied. The 2018 Performance RSUs had no rights to dividends or voting prior to vesting and payout in common stock. Vesting of the 2018 Performance RSUs with respect to the TSR Performance Goal was determined after the 2018 Performance Period based on a comparison of the Company’s TSR to the S&P 500 Index’s TSR as computed by Standard and Poor’s using their TSR methodology. Vesting of the 2018 Performance RSUs with respect to the ROI, SG&A and GP Performance Goals was determined after the 2018 Performance Period based on the relative ranking of the Company’s performance on each Performance Goal to each peer group company’s performance on each Performance Goal. The hurdle or threshold for earning or vesting in 2018 Performance RSUs with respect to the TSR goal was to perform better than ten percentage points below the S&P 500 Index. The hurdle or threshold for earning or vesting in the 2018 Performance RSUs with respect to the ROI, SG&A and GP Performance Goals was to perform no worse than tenth place because in that event no bonus for that specific goal would be earned. The following tables set forth the final peer group rankings based on TSR, ROI, SG&A and GP for the peer group and the Company with respect to the 2018 Performance RSUs:

  41. 2018 Performance RSUs

    2018 Performance RSUs

  42. Final Peer Group Rankings

    Final Peer Group Rankings

  43. Final Peer Group Rankings

    | | Relative Total Shareholder Return | | | Company / Index Name | 9/30/2015 | 9/30/2018 | | D.R. Horton, Inc. | 100 | 148.68* | | S&P 500 Index | 100 | 161.43 |

  44. Final Peer Group Rankings

    | Final performance goal ranking attained by the Company on the TSR performance goal was 12.75 points below the S&P 500 Index at September 30, 2018, as reflected in the table above.* |

  45. Final Peer Group Rankings

    | | ROI, SG&A and GP Rankings | | | | | | | | | | | Performance Goal | 10(th) Place | 9(th) Place | 8(th) Place | 7(th) Place | 6(th) Place | 5(th) Place | 4(th) Place | 3(rd) Place | 2(nd) Place | 1(st) Place | | Relative ROI | (2.11)% | 4.69% | 14.96% | 22.52% | 22.80% | 23.58% | 24.18% | 33.58% | 41.22%* | 85.93% | | Relative SG&A | 19.14% | 12.87% | 12.23% | 12.22% | 11.56% | 11.04% | 10.56%* | 10.31% | 10.28% | 7.40% | | Relative GP | 13.45% | 16.25% | 16.32% | 16.86% | 17.71% | 18.55% | 20.23%* | 20.72% | 21.29% | 23.65% |

  46. Final Peer Group Rankings

    | Final performance goal ranking attained by the Company: 2(nd) place on ROI, 4(th) place on SG&A and 4(th) place on GP.* |

  47. 2018 Performance RSUs

    2018 Performance RSUs

  48. Final Results – Earned and Paid

    | Final Company Performance Rankings | Donald R. Horton | | David V. Auld | | Michael J. Murray | | | | Target Number of RSUs Awarded | Number of RSUs Earned | Target Number of RSUs Awarded | Number of RSUs Earned | Target Number of RSUs Awarded | Number of RSUs Earned | | TSR = 12.75 Points Below | 50,000 Units | — | 25,000 Units | — | 7,500 Units | — | | ROI = 2nd Place | 50,000 Units | 87,500 Units | 25,000 Units | 43,750 Units | 7,500 Units | 13,125 Units | | SG&A = 4th Place | 50,000 Units | 62,500 Units | 25,000 Units | 31,250 Units | 7,500 Units | 9,375 Units | | GP = 4th Place | 50,000 Units | 62,500 Units | 25,000 Units | 31,250 Units | 7,500 Units | 9,375 Units | | | 200,000 Units | 212,500 Units | 100,000 Units | 106,250 Units | 30,000 Units | 31,875 Units |

  49. Final Results – Earned and Paid

    A normalization adjustment was made to the final peer group rankings to include the results of discontinued operations for one peer group member in calculating ROI, SG&A and GP so that all peer group members and the Company were treated consistently. The normalization adjustment did not change the Company’s final ranking on the ROI, SG&A or GP goals. After reviewing the above final performance goal rankings for the 2018 Performance RSUs, on November 6, 2018 the Compensation Committee approved the issuance of 212,500, 106,250 and 31,875 shares of common stock to Mr. Horton, Mr. Auld and Mr. Murray, respectively. 2018 Fiscal Year – Award of 2020 Performance Restricted Stock Units – Potential Vesting at September 30, 2020 and Award of Restricted Stock Units – Time-Based Vesting Chairman, Chief Executive Officer and Chief Operating Officer. Under our long-term incentive program, our Chairman, CEO and COO have the opportunity to earn incentive awards based on performance over a period longer than one year. By awarding a portion of compensation over a longer time period, the interests of these executives are aligned with the interests of our stockholders. In the first quarter of fiscal 2018, the Compensation Committee awarded performance restricted stock units (the “2020 Performance RSUs”) to Mr. Horton, Mr. Auld and Mr. Murray as follows:

  50. Final Results – Earned and Paid

    | Name | Target Number of 2020 Performance RSUs | | Donald R. Horton | 200,000 | | David V. Auld | 100,000 | | Michael J. Murray | 30,000 |

  51. Final Results – Earned and Paid

    The 2020 Performance RSUs, based on four performance goals of relative TSR, relative ROI, relative SG&A and relative GP, will vest, if at all, based on the final performance rankings after the completion of the performance period, which is the three-year period of October 1, 2017 through September 30, 2020 (the “2020 Performance Period”). The four performance goals and weightings for each award are similar to those set forth on page 29 and are discussed below in the tables and discussion on pages 35, 36 and 37. The Compensation Committee chose the relative TSR performance goal because TSR takes into account changes in our stock price plus dividends paid compared to the S&P 500 Index. By comparing our TSR to the S&P 500 Index, we have a goal that incents our executives to achieve a return to our stockholders that is better than the return achieved by a broad-based index of companies. We believe the three performance goals of relative ROI, relative SG&A and relative GP are important internal operating metrics. ROI incents our executives to achieve operating profitability relative to our total assets, which measures our efficiency at using our assets to generate pre-tax income. SG&A incents our executives to control selling, general and administrative expenses. GP incents our executives to maximize our sales prices and control sales incentives and costs of sales, which are composed of the costs of land, labor, materials and products used in building our homes. In fiscal 2018, when determining the target number of 2020 Performance RSUs, the Compensation Committee reviewed the Company’s performance and the estimated annual compensation expense for these awards in relation to the Company’s estimated annual financial metrics, such as revenue and pre-tax income. The Compensation Committee chose to further incent these executive officers by potentially increasing the target up to the maximum (two times the target amount), as set forth in the tables on pages 35, 36 and 37, in the event that maximum performance is achieved on the four Performance Goals. When the 2020 Performance RSUs were granted, the target and maximum amounts were subjective determinations and not based on any formulaic method or benchmark. The number of the 2020 Performance RSUs actually settled may be increased or decreased based on relative performance over the 2020 Performance Period as set forth in the following tables.

  52. Donald R. Horton

    | TSR Portion of Award (weighted 25% of target award) | | | | Company TSR Relative to S&P 500 Index TSR | Payout | Number of Performance RSUs Awarded | | Percentage Points Below Index: | | | | 10 Percentage Points | | zero | | 9 Percentage Points | Threshold | 5,000 | | 8 Percentage Points | | 10,000 | | 7 Percentage Points | | 15,000 | | 6 Percentage Points | | 20,000 | | 5 Percentage Points | | 25,000 | | 4 Percentage Points | | 30,000 | | 3 Percentage Points | | 35,000 | | 2 Percentage Points | | 40,000 | | 1 Percentage Point | | 45,000 | | Equal to S&P 500 Index TSR | Target | 50,000(1) | | Percentage Points Above Index: | | | | 1 Percentage Point | | 55,000 | | 2 Percentage Points | | 60,000 | | 3 Percentage Points | | 65,000 | | 4 Percentage Points | | 70,000 | | 5 Percentage Points | | 75,000 | | 6 Percentage Points | | 80,000 | | 7 Percentage Points | | 85,000 | | 8 Percentage Points | | 90,000 | | 9 Percentage Points | | 95,000 | | 10 Percentage Points | Maximum | 100,000 |

  53. Donald R. Horton

    | ROI, SG&A and GP Portions of Award (each weighted 25% of target award) | | | | Performance Level Compared to Peer Group | Payout | Number of Performance RSUs Awarded | | 11(th) Place | | zero | | 10(th) Place | Threshold | 25,000 | | 9(th) Place | | 50,000 | | 8(th) Place | | 75,000 | | 7(th) Place | | 100,000 | | 6(th) Place | | 125,000 | | 5(th) Place | Target | 150,000(2) | | 4(th) Place | | 187,500 | | 3(rd) Place | | 225,000 | | 2(nd) Place | | 262,500 | | 1(st) Place | Maximum | 300,000 |

  54. David V. Auld

    | TSR Portion of Award (weighted 25% of target award) | | | | Company TSR Relative to S&P 500 Index TSR | Payout | Number of Performance RSUs Awarded | | Percentage Points Below Index: | | | | 10 Percentage Points | | zero | | 9 Percentage Points | Threshold | 2,500 | | 8 Percentage Points | | 5,000 | | 7 Percentage Points | | 7,500 | | 6 Percentage Points | | 10,000 | | 5 Percentage Points | | 12,500 | | 4 Percentage Points | | 15,000 | | 3 Percentage Points | | 17,500 | | 2 Percentage Points | | 20,000 | | 1 Percentage Point | | 22,500 | | Equal to S&P 500 Index TSR | Target | 25,000(1) | | Percentage Points Above Index: | | | | 1 Percentage Point | | 27,500 | | 2 Percentage Points | | 30,000 | | 3 Percentage Points | | 32,500 | | 4 Percentage Points | | 35,000 | | 5 Percentage Points | | 37,500 | | 6 Percentage Points | | 40,000 | | 7 Percentage Points | | 42,500 | | 8 Percentage Points | | 45,000 | | 9 Percentage Points | | 47,500 | | 10 Percentage Points | Maximum | 50,000 |

  55. David V. Auld

    | ROI, SG&A and GP Portions of Award (each weighted 25% of target award) | | | | Performance Level Compared to Peer Group | Payout | Number of Performance RSUs Awarded | | 11(th) Place | | zero | | 10(th) Place | Threshold | 12,500 | | 9(th) Place | | 25,000 | | 8(th) Place | | 37,500 | | 7(th) Place | | 50,000 | | 6(th) Place | | 62,500 | | 5(th) Place | . Target | 75,000 | | 4(th) Place | | 93,750 | | 3(rd) Place | | 112,500 | | 2(nd) Place | | 131,250 | | 1(st) Place | Maximum | 150,000 |

  56. Michael J. Murray

    | TSR Portion of Award (weighted 25% of target award) | | | | Company TSR Relative to S&P 500 Index TSR | Payout | Number of Performance RSUs Awarded | | Percentage Points Below Index: | | | | 10 Percentage Points | | zero | | 9 Percentage Points | Threshold | 750 | | 8 Percentage Points | | 1,500 | | 7 Percentage Points | | 2,250 | | 6 Percentage Points | | 3,000 | | 5 Percentage Points | | 3,750 | | 4 Percentage Points | | 4,500 | | 3 Percentage Points | | 5,250 | | 2 Percentage Points | | 6,000 | | 1 Percentage Point | | 6,750 | | Equal to S&P 500 Index TSR | Target | 7,500(1) | | Percentage Points Above Index: | | | | 1 Percentage Point | | 8,250 | | 2 Percentage Points | | 9,000 | | 3 Percentage Points | | 9,750 | | 4 Percentage Points | | 10,500 | | 5 Percentage Points | | 11,250 | | 6 Percentage Points | | 12,000 | | 7 Percentage Points | | 12,750 | | 8 Percentage Points | | 13,500 | | 9 Percentage Points | | 14,250 | | 10 Percentage Points | Maximum | 15,000 |

  57. Michael J. Murray

    | ROI, SG&A and GP Portions of Award (each weighted 25% of target award) | | | | Performance Level Compared to Peer Group | Payout | Number of Performance RSUs Awarded | | 11(th) Place | | zero | | 10(th) Place | Threshold | 3,750 | | 9(th) Place | | 7,500 | | 8(th) Place | | 11,250 | | 7(th) Place | | 15,000 | | 6(th) Place | | 18,750 | | 5(th) Place | Target | 22,500(2) | | 4(th) Place | | 28,125 | | 3(rd) Place | | 33,750 | | 2(nd) Place | | 39,375 | | 1(st) Place | Maximum | 45,000 |

  58. Michael J. Murray

    As set forth in the tables above, the target number of 2020 Performance RSUs may be increased to a maximum of 400,000 for Mr. Horton, 200,000 for Mr. Auld and 60,000 for Mr. Murray upon maximum achievement of each of the four Performance Goals and decreased to a minimum of zero for Mr. Horton, Mr. Auld and Mr. Murray in the event of below-threshold achievement of each of the four Performance Goals. Performance and percentages that fall between the maximum and the minimum will be ranked using pro-rata linear interpolation between the points set forth in the tables above. For the 2020 Performance RSUs, the Company’s peer group consists of the following publicly-traded homebuilding companies: KB Home, Lennar, M.D.C. Holdings, Meritage Homes, NVR, PulteGroup, Taylor Morrison, Toll Brothers and TRI Pointe Group. When the 2020 Performance RSUs were granted, CalAtlantic Group was included in the peer group. When CalAtlantic Group merged into Lennar in February 2018, they were removed from the peer group. Each 2020 Performance RSU represents the contingent right to receive one share of common stock if vesting is satisfied. The 2020 Performance RSUs have no rights to dividends or voting. Vesting of the 2020 Performance RSUs with respect to the TSR Performance Goal will be determined after the 2020 Performance Period based on a comparison of the Company’s TSR to the S&P 500 Index’s TSR as computed by Standard and Poor’s using their TSR methodology. Vesting of the 2020 Performance RSUs with respect to the ROI, SG&A and GP Performance Goals will be determined after the 2020 Performance Period based on the relative ranking of the Company’s performance on each Performance Goal compared to each peer group company’s performance on each Performance Goal. Any portion of the Performance RSUs that does not vest due to performance below the threshold will be forfeited. The hurdle or threshold for earning 2020 Performance RSUs with respect to the TSR goal is to perform better than ten percentage points below the S&P 500 Index. The hurdle or threshold for earning 2020 Performance RSUs with respect to the ROI, SG&A and GP Performance Goals is to perform no worse than tenth place because in that event no bonus for that specific goal would be earned. Additional information on the grant date fair value of the 2020 Performance RSUs is set forth in the “Summary Compensation Table” on page 44 and the “Grants of Plan-Based Awards” table on page 46. At the time of grant, the Compensation Committee made the subjective determination to set the target and maximum number of 2020 Performance RSUs equal to the 2019 Performance RSUs, based on consideration that if the target or maximum amount were paid and the Company’s stock price is at its current level, total compensation to our executive officers would remain within the range of estimated total compensation paid to similar executives in the Company’s peer group. However, we cannot guarantee this result as it involves future compensation practices of our peer group. The Compensation Committee further believed in the importance of setting a maximum that is significantly higher than the target to incentivize performance. If the maximum level for the performance goals was achieved, the Company would be in a stronger competitive position than its peers and could create more value for our stockholders. Chief Financial Officer. In fiscal 2018, Mr. Wheat was awarded time-vesting RSUs at the same time the Chairman, CEO and COO were awarded Performance RSUs. We believe this type of award incentivizes him appropriately in his role as CFO. During the first quarter of fiscal 2018, the Compensation Committee approved and awarded the 2020 Restricted Stock Units (“2020 Time-Vesting RSUs”) to Mr. Wheat as follows:

  59. Michael J. Murray

    | Name | Number of 2020 Time-Vesting RSUs | | Bill W. Wheat | 40,000 |

  60. Michael J. Murray

    The 2020 Time-Vesting RSUs vest over a three-year period beginning on November 2, 2017 and ending on November 2, 2020. One-third of the 2020 Time-Vesting RSUs will vest each year on November 2 in 2018, 2019 and 2020, subject to continued employment.

  61. 2018 Fiscal Year – Award of Restricted Stock Units – Time-Based Vesting

    2018 Fiscal Year – Award of Restricted Stock Units – Time-Based Vesting Chairman and Chief Executive Officer. Mr. Horton and Mr. Auld were awarded 67,500 and 27,000 restricted stock units, respectively, on March 7, 2018 by the Compensation Committee. These restricted stock units vest in equal installments over three years on each anniversary of the grant date, subject to continued employment. In determining the number of restricted stock units to award, the Compensation Committee made a subjective determination based on each of the factors listed on page 41 under the heading “2006 Stock Incentive Plan.” In addition to those factors, the Compensation Committee also reviewed the Company’s stock price, total compensation of the officers, the expected compensation expense related to the grant and the number of restricted stock units and stock options outstanding for both Mr. Horton and Mr. Auld, without giving any formulaic effect to such factors. In addition, the Compensation Committee set the vesting term at three years based on certain factors which included the tenure and role of each executive with the Company, the age of each executive, the retention value and the lack of an employment agreement between each executive and the Company. The terms of the restricted stock unit agreements provide that if the recipient is 65 years old or older and retires from the Company, all unvested restricted stock units become vested. Mr. Horton currently qualifies for such treatment. Additional information on the annual compensation expense and grant date fair value of these restricted stock units is set forth in the “Summary Compensation Table” on page 44 and the “Grants of Plan-Based Awards” table on page 46 of this Proxy Statement. Chief Operating Officer and Chief Financial Officer. Mr. Murray and Mr. Wheat were each awarded 23,000 restricted stock units on March 7, 2018 by the Compensation Committee. These restricted stock units vest in equal installments over five years on each anniversary of the grant date, subject to continued employment. In determining the number of restricted stock units to award, the Compensation Committee made a subjective determination based on the factors listed on page 41 under the heading “2006 Stock Incentive Plan.” In addition to those factors, the Compensation Committee also reviewed the Company’s stock price, total compensation of the officers, the expected compensation expense related to the grant and the number of restricted stock units and stock options outstanding for both Mr. Murray and Mr. Wheat as a result of the new restricted stock units granted, without giving any formulaic effect to such factors. In addition, the Compensation Committee set the vesting term at five years based on certain factors which include the tenure and role of each executive with the Company, the retention value of restricted stock units based on a five-year vesting schedule and the lack of an employment agreement between each executive and the Company. Additional information on the annual compensation expense and grant date fair value of these restricted stock units is set forth in the “Summary Compensation Table” on page 44 and the “Grants of Plan-Based Awards” table on page 46 of this Proxy Statement.

  62. 2019 Fiscal Year – Annual Incentive Bonus

    2019 Fiscal Year – Annual Incentive Bonus Chairman, Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. The Compensation Committee has decided to continue the annual incentive bonus opportunity based on the same pre-tax income targets for Mr. Horton, Mr. Auld and Mr. Murray in fiscal 2019 and the discretionary bonus opportunity for Mr. Wheat.

  63. 2019 Fiscal Year – Annual Incentive Bonus

    | Name | Fiscal 2018 Performance Goal | Maximum Bonus Potential | | | | | 1(st) Semi-Annual Period | 2(nd) Semi-Annual Period | | Donald R. Horton | Pre-Tax Income | 0.6% | 0.6% | | David V. Auld | Pre-Tax Income | 0.4% | 0.4% | | Michael J. Murray | Pre-Tax Income | 0.15% | 0.15% |

  64. 2019 Fiscal Year – Annual Incentive Bonus

    Mr. Wheat’s annual incentive bonus will be discretionary in nature and based on the performance of his duties described under the heading “2018 Fiscal Year — Annual Discretionary Bonus” beginning on page 28.

  65. 2019 Fiscal Year – Award of 2021 Performance Restricted Stock Units – Potential Vesting at September 30, 2021

    2019 Fiscal Year – Award of 2021 Performance Restricted Stock Units – Potential Vesting at September 30, 2021 Chairman, Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. During the first quarter of fiscal 2019, the Compensation Committee approved and awarded the 2021 Performance Restricted Stock Units (“2021 Performance RSUs”) to Mr. Horton, Mr. Auld, Mr. Murray and Mr. Wheat as follows:

  66. 2019 Fiscal Year – Award of 2021 Performance Restricted Stock Units – Potential Vesting at September 30, 2021

    | Name | Target Number of 2021 Performance RSUs | | Donald R. Horton | 200,000 | | David V. Auld | 100,000 | | Michael J. Murray | 30,000 | | Bill W. Wheat | 30,000 |

  67. 2019 Fiscal Year – Award of 2021 Performance Restricted Stock Units – Potential Vesting at September 30, 2021

    The 2021 Performance RSUs may vest based on the Company’s final performance rankings after the completion of the three-year performance period of October 1, 2018 through September 30, 2021. The 2021 Performance RSUs operate in a similar manner as the 2020 Performance RSUs awarded, as discussed in the section “2018 Fiscal Year — Award of 2020 Performance Restricted Stock Units — Potential Vesting at September 30, 2020 and Award of Restricted Stock Units — Time-Based Vesting” on page 34. For Fiscal 2019, it was determined by the Compensation Committee that Mr. Wheat, our CFO, should receive performance RSUs, similar to our Chairman, CEO and COO. In prior years, Mr. Wheat was awarded time-vesting RSUs at the same time as our Chairman, CEO and COO were awarded performance RSUs.

  68. 2019 Fiscal Year – Award of Restricted Stock Units – Time-Based Vesting

    2019 Fiscal Year – Award of Restricted Stock Units – Time-Based Vesting Chairman and Chief Executive Officer. Mr. Horton and Mr. Auld were awarded 84,600 and 33,850 restricted stock units, respectively, on November 26, 2018 by the Compensation Committee. These restricted stock units vest in equal installments over three years from the grant date, subject to continued employment. In determining the number of restricted stock units to award, the Compensation Committee made a subjective determination based on each of the factors listed on page 41 under the heading “2006 Stock Incentive Plan.” In addition to those factors, the Compensation Committee also reviewed the Company’s stock price, total compensation of the officers, the expected compensation expense related to the grant and the number of restricted stock units and stock options outstanding for both Mr. Horton and Mr. Auld as a result of the new restricted stock units granted, without giving any formulaic effect to such factors. In addition, the Compensation Committee set the vesting term at three years based on certain factors which included the tenure and role of each executive with the Company, the age of each executive, the retention value and the lack of an employment agreement between each executive and the Company. The terms of the restricted stock unit agreements provide that if the recipient is 65 years old or older and retires from the Company, all unvested restricted stock units become vested. Mr. Horton currently qualifies for this treatment. Chief Operating Officer and Chief Financial Officer. Mr. Murray and Mr. Wheat were each awarded 29,650 restricted stock units on November 26, 2018 by the Compensation Committee. These restricted stock units vest in equal installments over five years from the grant date, subject to continued employment. In determining the number of restricted stock units to award, the Compensation Committee made a subjective determination based on the factors listed on page 41 under the heading “2006 Stock Incentive Plan.” In addition to those factors, the Compensation Committee also reviewed the Company’s stock price, total compensation of the officers, the expected compensation expense related to the grant and the number of restricted stock units and stock options outstanding for both Mr. Murray and Mr. Wheat, without giving any formulaic effect to such factors. In addition, the Compensation Committee set the vesting term at five years based on certain factors which include the tenure and role of each executive with the Company, the retention value of restricted stock units based on a five-year vesting schedule and the lack of an employment agreement between each executive and the Company.

  69. Incentive Bonus Plans

    Incentive Bonus Plans We believe that performance-based bonuses should continue to represent a significant portion of the compensation of our Chairman, CEO and COO. We seek to structure our performance-based awards in a manner that is in line with our operational and financial objectives. The Compensation Committee believes that a balanced executive compensation program is best served by providing compensation plans that allow for balanced short and long-term compensation components, including (i) a short-term or annual bonus performance plan, and (ii) a short-term and long-term equity plan. In furtherance of this objective, the Compensation Committee and our stockholders have previously approved the following incentive plans:

  70. Incentive Bonus Plans

    | • | D.R. Horton 2018 Incentive Bonus Plan (formerly the “D.R. Horton 2017 Incentive Bonus Plan”) – our primary short-term or annual bonus plan. |

  71. Incentive Bonus Plans

    | • | D.R. Horton 2006 Stock Incentive Plan – our primary short and long-term equity plan. |

  72. Incentive Bonus Plans

    The 2017 Incentive Bonus Plan was approved by our stockholders most recently on January 24, 2018. The 2018 Incentive Bonus Plan was adopted and approved by our Compensation Committee on November 6, 2018 and replaces the 2017 Incentive Bonus Plan. The amended and restated 2006 Stock Incentive Plan was approved by our stockholders most recently on January 22, 2015. The Compensation Committee will continue to evaluate the most effective way to use these two plans. Internal Revenue Code Section 162(m) and The Tax Cuts and Jobs Act. When reviewing and setting compensation awards for our executives, we have historically considered the tax deductibility of their compensation under Section 162(m) as one of many factors. Section 162(m) generally does not allow a tax deduction to publicly-held companies for compensation over $1 million paid in any fiscal year to the company’s named executive officers (other than the chief financial officer). However, for a number of our fiscal years ending on or before September 30, 2018, Section 162(m) exempted qualified performance-based compensation from this $1 million limit if certain requirements were met. Historically, our general intent was for awards issued to covered employees to qualify for the performance-based compensation deduction allowed by Section 162(m). In December 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted into law. The Tax Act eliminates the qualified performance-based exception to the $1 million deduction limit and subjects the CFO, as well as certain other covered employees, to the $1 million limitation for taxable years beginning after December 31, 2017. The Tax Act includes a grandfathering provision for compensation paid pursuant to (1) a written binding contract in effect on or before November 2, 2017 that (2) has not been modified in any material way since that date. Based on current guidance, we believe our equity grants awarded on and prior to November 2, 2017, under our amended and restated 2006 Stock Incentive Plan, and deferred compensation to be paid pursuant to a written binding contract in effect on or before November 2, 2017 are in compliance with this grandfathering provisions and will remain deductible. Performance based compensation paid pursuant to the 2018 Incentive Bonus Plan and equity grants awarded after November 2, 2017 under our amended and restated 2006 Stock Incentive Plan will likely be subject to the limitations on deductibility under Section 162(m) as expanded by the Tax Act. In addition, any future contributions to our deferred compensation plans will likely also be subject to the Section 162(m) limits. 2018 Incentive Bonus Plan. The 2018 Incentive Bonus Plan is the primary plan under which our Chairman, CEO and COO are awarded short-term annual incentive cash bonuses. Historically, our intent was for annual bonus awards issued to covered employees to qualify for the performance-based compensation deduction allowed by Section 162(m). Although we still intend to grant performance-based annual compensation opportunities, we no longer expect such amounts to be fully deductible under Section 162(m). 2006 Stock Incentive Plan. We use our Amended and Restated 2006 Stock Incentive Plan to issue restricted stock units, stock options and other equity based awards. Since 2015, the Compensation Committee has awarded restricted stock units to the executive officers and key employees on an annual basis. The decision to award restricted stock units was based on the strong employee retention value of restricted stock units and that restricted stock grants result in less dilution to the Company. The Compensation Committee will continue to evaluate when to make equity awards to its executives and key employees based on the total compensation of individuals and other factors. Generally, when the Compensation Committee decides to grant equity awards to executive officers, in determining the number and material terms of equity awards to grant the Committee makes a subjective evaluation of:

  73. Incentive Bonus Plans

    | • | the overall performance of the Company in comparison to its peer group; |

  74. Incentive Bonus Plans

    | • | an analysis of recent compensation of senior executive officers in the Company’s peer group; |

  75. Incentive Bonus Plans

    | • | recommendations of the Chairman, other than for himself; |

  76. Incentive Bonus Plans

    | • | contributions the executive officer made and is anticipated to make to the Company’s success; |

  77. Incentive Bonus Plans

    | • | level of experience and responsibility of the executive officer; and |

  78. Incentive Bonus Plans

    | • | number of equity awards previously granted to executive officers and other employees. |

  79. Incentive Bonus Plans

    There is no relationship between the timing of the granting of equity-based awards and our release of material non-public information. We will continue to evaluate the types of equity awards to be granted to our executives and other employees in the future. Restricted stock, restricted stock units, stock options and stock appreciation rights are among the types of equity awards that may be considered in the future which may be awarded under our 2006 Stock Incentive Plan. When considering whether to issue restricted stock (including restricted stock units) or stock options (including stock appreciation rights), the Compensation Committee will review the following factors (in addition to the previously listed factors):

  80. Incentive Bonus Plans

    | • | difference in compensation expense of issuing restricted stock units versus issuing stock options; |

  81. Incentive Bonus Plans

    | • | retention achieved by issuing restricted stock units versus issuing stock options; and |

  82. Incentive Bonus Plans

    | • | value to employee of receiving restricted stock units versus stock options. |

  83. Incentive Bonus Plans

    The Compensation Committee believes that restricted stock, restricted stock units and stock options should be available alternatives when considering equity awards. Restricted stock units provide strong retentive value by providing an award that has immediate value upon vesting and results in lower dilution of our outstanding common shares because fewer shares are issued compared to stock options. Stock options have the potential for strong returns if the stock price increases and the recipient has the ability to defer paying the exercise price and related taxes until the stock options are exercised.

  84. Retirement Benefits

    Retirement Benefits Our executive officers do not participate in any qualified defined benefit plans, but they do participate in the retirement plans below. We believe that it is important to offer these retirement plans to our executive officers as part of a competitive long-term compensation program that encourages saving for retirement and that promotes long-term retention. Profit Sharing Plus Plan (“401(k) plan”). Our executive officers participate in our Company-wide 401(k) plan. Under this plan, executive officers, like all other eligible employees, may contribute 1% to 75% of their earnings, on a pre-tax basis, into the 401(k) plan. For 2018, the maximum amount that could be contributed was $18,500 ($24,500 for participants 50 years or older). The Company makes a matching contribution to the participant’s account in an amount of $0.50 for each $1.00 contributed by the participant up to 6% of his or her salary. The matching contributions made by the Company on behalf of the executive officers are included in the “All Other Compensation” column in the “Summary Compensation Table” on page 44. Deferred Compensation Plan. The Company established the Deferred Compensation Plan effective as of June 15, 2002 and amended and restated it on December 10, 2008 (the “Deferred Compensation Plan”). The Deferred Compensation Plan is a nonqualified 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, as amended and restated, 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”), as amended and restated December 10, 2008, a nonqualified plan, was originally adopted by the Company in 1994 to permit eligible participants, which include our executive officers, region presidents, division presidents and other key employees, to accrue supplemental Company benefits payable upon retirement, separation of service, death or disability. The SERP 2 provides that if the executive is employed by the Company on the last day of the fiscal year, the Company will establish a liability to such executive equal to 10% of his or her annual base salary as of the first day of such fiscal year. This liability will accrue earnings in future years at a rate established by the administrative committee for the SERP 2. Amounts payable under the SERP 2 are not secured or held in trust and the plan participants’ rights to enforce payment are the same as a general unsecured creditor. In connection with our risk oversight related to the retention and compensation of our named executive officers, the Compensation Committee has determined that an appropriate compensation package should include a reasonable amount of fixed compensation for both short and longer term compensation. In this regard, in fiscal 2018, the Compensation Committee reviewed the amounts listed in the column titled “Change in Pension Value and Nonqualified Deferred Compensation Earnings” in the “Summary Compensation Table” on page 44. For the Company, these amounts represent the above-market portion of earnings on outstanding SERP 2 balances for the named executive officers. As part of this analysis, we reviewed the data related to the dollar amounts disclosed in the same column titled “Change in Pension Value and Nonqualified Deferred Compensation Earnings” in the Summary Compensation Tables for each of the CEOs or principal executive officers of each company in our peer group from their most recently filed proxy statements. The dollar amounts listed under this heading ranged from zero to $428,586. For fiscal 2018, the amount for our Chairman was $266,647 and the amount for our CEO was $121,815. We believe the amounts accrued for above-market earnings on SERP 2 balances are reasonable when compared to our peer group and reasonable when considered in relation to the total compensation packages offered to our named executive officers. Also, we considered other factors such as the Company does not provide our named executive officers with employment agreements or severance agreements or other forms of guaranteed retirement benefits other than the 401(k) matching contribution discussed above. As a result, our SERP 2 program continues to serve as a useful and reasonable fixed compensation component of our overall compensation package.

  85. Summary Compensation Table

    Summary Compensation Table

  86. Summary Compensation Table

    | Name and Principal Position | Year | Salary | Bonus(1) | Stock Awards(2) | Non-Equity Incentive Plan Compen- satio (3) | Change in Pension Value and Non- Qualified Deferred Compen- sation Earnings(4) | All Other Compen- sation(5) | Total | | Donald R. Horton | 2018 | $1,000,000 | — | $12,011,900 | $12,359,792 | $266,647 | $111,509 | $25,749,848 | | Chairman of the Board | 2017 | $1,000,000 | — | $8,302,706 | $9,612,519 | $255,991 | $111,413 | $19,282,629 | | | 2016 | $1,000,000 | — | $8,360,660 | $8,120,730 | $204,524 | $111,263 | $17,797,177 | | David V. Auld | 2018 | $700,000 | — | $5,720,560 | $8,239,862 | $121,815 | $78,250 | $14,860,487 | | President and Chief Executive Officer | 2017 | $700,000 | — | $3,905,374 | $5,607,303 | $115,176 | $78,100 | $10,405,953 | | | 2016 | $700,000 | — | $3,960,464 | $4,737,092 | $90,361 | $77,950 | $9,565,867 | | Michael J. Murray | 2018 | $500,000 | — | $2,333,950 | $3,089,948 | $43,744 | $58,250 | $6,025,892 | | Executive Vice President and Chief Operating Officer | 2017 | $500,000 | — | $1,724,583 | $1,602,087 | $39,549 | $58,100 | $3,924,319 | | | 2016 | $500,000 | — | $1,680,013 | $1,353,455 | $29,306 | $57,950 | $3,620,724 | | Bill W. Wheat | 2018 | $500,000 | $1,500,000 | $2,698,650 | — | $68,671 | $58,250 | $4,825,571 | | Executive Vice President and Chief Financial Officer | 2017 | $500,000 | $1,300,000 | $1,676,883 | — | $64,161 | $58,100 | $3,599,144 | | | 2016 | $500,000 | $1,100,000 | $1,625,113 | — | $49,607 | $57,950 | $3,332,670 |

  87. Summary Compensation Table

    | The amounts listed represent discretionary cash bonuses paid to Mr. Wheat.(1) |

  88. Summary Compensation Table

    For Mr. Wheat, $100,000 of the fiscal 2016 amount was paid in common stock. Mr. Wheat was issued 3,495 shares of common stock and the value of that stock was based on the Company’s stock price at September 30, 2016.

  89. Summary Compensation Table

    | For fiscal 2018, the amounts for Mr. Horton, Mr. Auld and Mr. Murray represent the grant date fair value, determined in accordance with accounting guidance for share-based payments, of the time-vesting RSUs granted in fiscal 2018 and the grant date fair value of the target number of 2020 Performance RSUs. If the maximum number of 2020 Performance RSUs that potentially could be earned were used rather than the target number, the total grant date fair value of the award would be $18,316,000 for Mr. Horton, $9,158,000 for Mr. Auld and $2,747,400 for Mr. Murray. The amount for Mr. Wheat represents the grant date fair value of the time-vesting RSUs granted in fiscal 2018. Additional information on the time-vesting and performance RSUs and the grant date fair value is set forth in footnote 2 to the “Grants of Plan-Based Awards” table on page 46.(2) |

  90. Summary Compensation Table

    For fiscal 2017, the amounts for Mr. Horton, Mr. Auld and Mr. Murray represent the grant date fair value, determined in accordance with accounting guidance for share-based payments, of the time-vesting RSUs granted in fiscal 2017 and the grant date fair value of the target number of 2019 Performance RSUs. If the maximum number of 2019 Performance RSUs that potentially could be earned were used rather than the target number, the total grant date fair value of the award would be $11,680,000 for Mr. Horton, $5,840,000 for Mr. Auld and $1,752,000 for Mr. Murray. The amount for Mr. Wheat represents the grant date fair value of the time-vesting RSUs granted in fiscal 2017. For fiscal 2016, the amounts for Mr. Horton, Mr. Auld and Mr. Murray represent the grant date fair value, determined in accordance with accounting guidance for share-based payments, of the time-vesting RSUs granted in fiscal 2016 and the grant date fair value of the target number of 2018 Performance RSUs. If the maximum number of 2018 Performance RSUs that potentially could be earned were used rather than the target number, the total grant date fair value of the award would be $12,324,000 for Mr. Horton, $6,162,000 for Mr. Auld and $1,848,600 for Mr. Murray. The amount for Mr. Wheat represents the grant date fair value of the time-vesting RSUs granted in fiscal 2016.

  91. Summary Compensation Table

    | Amounts represent the performance bonuses under the Company’s Annual Incentive Bonus Plan. Additional information on the annual incentive bonus is discussed under the heading “2018 Fiscal Year — Annual Incentive Bonus Results and Payout” on page 28.(3) |

  92. Summary Compensation Table

    | Amounts represent the above-market portion of earnings on each executive officer’s outstanding balance under the SERP 2. This amount is further discussed under the heading “SERP 2” on page 42.(4) |

  93. Summary Compensation Table

    | For fiscal 2018, the amounts under “All Other Compensation” include the following components:(5) |

  94. Summary Compensation Table

    | Credits made by the Company of $100,000, $70,000, $50,000 and $50,000 to the respective accounts of Mr. Horton, Mr. Auld, Mr. Murray and Mr. Wheat under the SERP 2 plan.(a) |

  95. Summary Compensation Table

    | Matching contributions of $8,250 to the respective accounts of Mr. Horton, Mr. Auld, Mr. Murray and Mr. Wheat under the D.R. Horton 401(k) plan.(b) |

  96. Summary Compensation Table

    | The participant’s portion of group health plan premiums of $3,259 paid by the Company for the benefit of Mr. Horton.(c) |

  97. Grants of Plan-Based Awards

    Grants of Plan-Based Awards

  98. Grants of Plan-Based Awards

    | | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Securities Underlying Stock Awards(3) | Grant Date Fair Value of Stock and Option Awards ($)(2)(3) | | Name | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | Donald R. Horton | 11/2/2017 | — | $12,359,792 | — | — | — | — | — | — | | | 11/2/2017 | — | — | — | 30,000 | 200,000 | 400,000 | — | $9,158,000 | | | 3/7/2018 | — | — | — | — | — | — | 67,500 | $2,853,900 | | David V. Auld | 11/2/2017 | — | $8,239,862 | — | — | — | — | — | — | | | 11/2/2017 | — | — | — | 15,000 | 100,000 | 200,000 | — | $4,579,000 | | | 3/7/2018 | — | — | — | — | — | — | 27,000 | $1,141,560 | | Michael J. Murray | 11/2/2017 | — | $3,089,948 | — | — | — | — | — | — | | | 11/2/2017 | — | — | — | 4,500 | 30,000 | 60,000 | — | $1,373,700 | | | 3/7/2018 | — | — | — | — | — | — | 23,000 | $960,250 | | Bill W. Wheat | 11/2/2017 | — | — | — | — | — | — | 40,000 | $1,738,400 | | | 3/7/2018 | — | — | — | — | — | — | 23,000 | $960,250 |

  99. Grants of Plan-Based Awards

    | Represents the performance bonuses paid under the Company’s 2017 Incentive Bonus Plan, now referred to as the 2018 Incentive Bonus Plan. Additional information related to the award is discussed under the heading “2018 Fiscal Year – Annual Incentive Bonus Results and Payout” on page 28.(1) |

  100. Grants of Plan-Based Awards

    | Mr. Horton, Mr. Auld and Mr. Murray were awarded a target amount of 200,000, 100,000 and 30,000 2020 Performance RSUs, respectively. The threshold, target and maximum amounts reflect the number of 2020 Performance RSUs each executive could earn based on the level of performance attained on four performance goals ranked against our peer group and the S&P 500 Index at the end of the three-year performance period.(2) |

  101. Grants of Plan-Based Awards

    The grant date fair value of the 2020 Performance RSUs is $45.79 per unit and was determined in accordance with accounting guidance for share-based payments. These 2020 Performance RSUs are discussed under the heading “2018 Fiscal Year – Award of 2020 Performance Restricted Stock Units – Potential Vesting at September 30, 2020 and Award of Restricted Stock Units – Time-Based Vesting” on page 34 and the related grant date fair value of $9,158,000 for Mr. Horton, $4,579,000 for Mr. Auld and $1,373,700 for Mr. Murray is reflected in the “Stock Awards” column in the “Summary Compensation Table” on page 44.

  102. Grants of Plan-Based Awards

    | On November 2, 2017, Mr. Wheat was awarded 40,000 time-vesting RSUs. The RSUs vest in three equal annual installments on each anniversary of the grant date.(3) |

  103. Grants of Plan-Based Awards

    The grant date fair value of the November 2, 2017 RSUs is $43.46 per unit and was determined in accordance with accounting guidance for share-based payments. The related grant date fair value of $1,738,400 for Mr. Wheat is reflected in the “Stock Awards” column in the “Summary Compensation Table” on page 44. On March 7, 2018, Mr. Horton, Mr. Auld, Mr. Murray and Mr. Wheat were awarded 67,500, 27,000, 23,000 and 23,000 time-vesting RSUs, respectively. The RSUs for Mr. Horton and Mr. Auld vest in three equal annual installments on each anniversary of the grant date. The RSUs for Mr. Murray and Mr. Wheat vest annually in five equal installments on each anniversary of the grant date. The grant date fair value of the March 7, 2018 RSUs vesting in three years is $42.28 per unit and for the RSUs vesting in five years is $41.75 per unit. The grant date fair values were determined in accordance with accounting guidance for share-based payments. The related grant date fair value of $2,853,900 for Mr. Horton, $1,141,560 for Mr. Auld, $960,250 for Mr. Murray and $960,250 for Mr. Wheat is reflected in the “Stock Awards” column in the “Summary Compensation Table” on page 44.

  104. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table shows information about outstanding equity awards at September 30, 2018.

  105. Outstanding Equity Awards at Fiscal Year-End

    | | Option Awards | | | | | Stock Awards | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Shares of Stock That Have Not Vested | | Donald R. Horton(1) | 3/7/2018 | — | — | — | — | 67,500(3) | — | $2,847,150(3) | | | 11/2/2017 | — | — | — | — | — | 400,000(4) | $16,872,000(5) | | | 2/14/2017 | — | — | — | — | 53,108(3) | — | $2,240,095(3) | | | 11/2/2016 | — | — | — | — | — | 400,000(6) | $16,872,000(7) | | | 2/12/2016 | — | — | — | — | 27,675(3) | — | $1,167,332(3) | | | 3/6/2014 | 150,000 | — | $23.86 | 3/6/2024 | — | — | — | | | 3/5/2013 | 150,000 | — | $23.80 | 3/5/2023 | — | — | — | | | 9/2/2011 | 300,000 | — | $9.97 | 9/2/2021 | — | — | — | | | 2/9/2009 | 300,000 | — | $9.03 | 2/9/2019 | — | — | — | | David V. Auld(2) | 3/7/2018 | — | — | — | — | 27,000(3) | — | $1,138,860(3) | | | 11/2/2017 | — | — | — | — | — | 200,000(4) | $8,436,000(5) | | | 2/14/2017 | — | — | — | — | 22,566(3) | — | $951,834(3) | | | 11/2/2016 | — | — | — | — | — | 200,000(6) | $8,436,000(7) | | | 2/12/2016 | — | — | — | — | 12,533(3) | — | $528,642(3) | | | 3/6/2014 | 48,000 | 12,000 | $23.86 | 3/6/2024 | — | — | — | | | 3/5/2013 | 60,000 | — | $23.80 | 3/5/2023 | — | — | — | | | 9/2/2011 | 72,000 | — | $9.97 | 9/2/2021 | — | — | — | | | 2/9/2009 | 48,000 | 12,000 | $9.03 | 2/9/2019 | — | — | — | | Michael J. Murray(2) | 3/7/2018 | — | — | — | — | 23,000(3) | — | $970,140(3) | | | 11/2/2017 | — | — | — | — | — | 60,000(4) | $2,530,800(5) | | | 2/14/2017 | — | — | — | — | 23,720(3) | — | $1,000,510(3) | | | 11/2/2016 | — | — | — | — | — | 60,000(6) | $2,530,800(7) | | | 2/12/2016 | — | — | — | — | 19,740(3) | — | $832,633(3) | | | 3/5/2015 | — | — | — | — | 13,160(3) | — | $555,089(3) | | | 3/6/2014 | 48,000 | 12,000 | $23.86 | 3/6/2024 | — | — | — | | | 3/5/2013 | 60,000 | — | $23.80 | 3/5/2023 | — | — | — | | | 9/2/2011 | 69,000 | — | $9.97 | 9/2/2021 | — | — | — | | | 2/9/2009 | 24,000 | 8,000 | $9.03 | 2/9/2019 | — | — | — | | Bill W. Wheat(2) | 3/7/2018 | — | — | — | — | 23,000(3) | — | $970,140(3) | | | 11/2/2017 | — | — | — | — | 40,000(3) | — | $1,687,200(3) | | | 2/14/2017 | — | — | — | — | 23,720(3) | — | $1,000,510(3) | | | 11/2/2016 | — | — | — | — | 20,000(3) | — | $843,600(3) | | | 2/12/2016 | — | — | — | — | 19,740(3) | — | $832,633(3) | | | 11/4/2015 | — | — | — | — | 10,000(3) | — | $421,800(3) | | | 3/5/2015 | — | — | — | — | 13,160(3) | — | $555,089(3) | | | 3/6/2014 | 48,000 | 12,000 | $23.86 | 3/6/2024 | — | — | — | | | 3/5/2013 | 60,000 | — | $23.80 | 3/5/2023 | — | — | — | | | 9/2/2011 | 88,000 | — | $9.97 | 9/2/2021 | — | — | — | | | 2/9/2009 | 12,000 | 12,000 | $9.03 | 2/9/2019 | — | — | — |

  106. Outstanding Equity Awards at Fiscal Year-End

    | All stock options have a ten-year term.(1) |

  107. Outstanding Equity Awards at Fiscal Year-End

    | All stock option awards granted to Mr. Auld, Mr. Murray and Mr. Wheat prior to September 2011 vest in ten equal annual installments on each successive anniversary of the grant date commencing on the first anniversary date for nine years with the final installment vesting on the date that is 9.75 years following the grant date. Stock option awards granted in September 2011 and thereafter vest annually in five equal installments. All stock options have a ten-year term.(2) |

  108. Outstanding Equity Awards at Fiscal Year-End

    | Represents the time-vesting RSUs granted to Mr. Horton, Mr. Auld, Mr. Murray and Mr. Wheat. The value of the time-vesting RSUs is based on the closing price of our common stock on September 28, 2018 of $42.18.(3) |

  109. Outstanding Equity Awards at Fiscal Year-End

    | Represents the potential maximum number of 2020 Performance RSUs awarded. The target number of 2020 Performance RSUs that can be earned is 200,000 for Mr. Horton, 100,000 for Mr. Auld and 30,000 for Mr. Murray upon target achievement of the performance goals. These 2020 Performance RSUs are described under “2018 Fiscal Year — Award of 2020 Performance Restricted Stock Units — Potential Vesting at September 30, 2020 and Award of Restricted Stock Units – Time-Based Vesting” on page 34.(4) |

  110. Outstanding Equity Awards at Fiscal Year-End

    | The value of the 2020 Performance RSUs is based on the closing price of our common stock on September 28, 2018 of $42.18.(5) |

  111. Outstanding Equity Awards at Fiscal Year-End

    | Represents the potential maximum number of 2019 Performance RSUs awarded. The target number of 2019 Performance RSUs that can be earned is 200,000 for Mr. Horton, 100,000 for Mr. Auld and 30,000 for Mr. Murray upon target achievement of the performance goals.(6) |

  112. Outstanding Equity Awards at Fiscal Year-End

    | The value of the 2019 Performance RSUs is based on the closing price of our common stock on September 28, 2018 of $42.18.(7) |

  113. Option Exercises and Stock Vested

    Option Exercises and Stock Vested The following table shows information about option exercises and stock vested during our fiscal year ended September 30, 2018.

  114. Option Exercises and Stock Vested

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise | Value Realized on Exercise(1) | Number of Shares Acquired on Vesting | Value Realized on Vesting(2) | | Donald R. Horton | 300,000 | $8,869,958 | 303,000 | $12,983,520 | | David V. Auld | 48,000 | $1,672,800 | 142,600 | $6,085,267 | | Michael J. Murray | 8,000 | $269,831 | 50,965 | $2,186,684 | | Bill W. Wheat | 36,000 | $1,402,450 | 49,090 | $2,174,895 |

  115. Option Exercises and Stock Vested

    | Amounts represent the difference in the aggregate market value and the aggregate exercise price of the shares at the time of exercise.(1) |

  116. Option Exercises and Stock Vested

    | Value reflects the closing stock price on the applicable vesting date multiplied by the number of shares that vested.(2) |

  117. Nonqualified Deferred Compensation Plans

    Nonqualified Deferred Compensation Plans D.R. Horton has established the following nonqualified deferred compensation plans: Deferred Compensation Plan. The Deferred Compensation Plan permits participants, including D.R. Horton’s executive officers and directors, to voluntarily defer receipt of up to 100% of bonus or director fee compensation from D.R. Horton and up to 90% of base salary from D.R. Horton. The participants earn a rate of return on their deferred amounts based on their selection from a variety of independently managed funds. The Company does not provide a guaranteed rate of return on these deferred amounts. The rate of return realized depends on the participant’s fund selections and market performance of these funds. Upon his or her annual election, a participant’s Deferred Compensation Plan benefit will be paid, or commence to be paid, upon separation from service or on a fixed date. Specified employees, as defined in Code Section 409A, generally cannot be paid until six months after separation from service (or, if earlier, upon a change in control). Payment may also be made upon death, disability or an unforeseeable emergency. Payments are made in a lump sum unless installments are elected. Amounts payable under the plan are not secured or held in trust, and the plan participants’ rights to enforce payment are the same as a general unsecured creditor. However, upon a change in control (as defined in the Deferred Compensation Plan), all plan benefits will be fully funded through an irrevocable grantor trust (also known as a “Rabbi trust”). The participants, at their election, may choose to have the deferred amounts paid out through scheduled in-service distributions (in a lump sum or annual installments of between two and five years) or following the later of termination of employment, director service or attaining the age of 62. The Deferred Compensation Plan was adopted and approved by the Compensation Committee and ratified by the Board of Directors. SERP 2. Unlike the Deferred Compensation Plan, these are not elective deferrals, but rather the Company credits an amount to each participant’s account. Participation in the SERP 2 is considered by the Compensation Committee annually at the beginning of the fiscal year. Pursuant to the 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 executive equal to 10% of his or her annual base salary as of the first day of such fiscal year. This liability will accrue earnings in future years at a rate established by the administrative committee for the SERP 2. Amounts payable under the SERP 2 are not secured or held in trust, and the plan participants’ rights to enforce payment are the same as a general unsecured creditor. Amounts deferred under the SERP 2 are payable within 60 days following the retirement or termination of employment of the participant, the death or disability of the participant or a change in control of the Company. Provided however, specified employees, as defined in Code Section 409A, generally cannot be paid until six months after separation from service (or, if earlier, upon a change in control). The definition of change in control is described in “Potential Payments Upon Termination or Change in Control” on page 50. The form of distribution may be in a lump sum, or in quarterly installments over a period not to exceed five years, as elected by the participant. The following table shows, for each named executive officer, aggregate contributions, earnings and withdrawals/distributions during fiscal 2018 and outstanding balances as of September 30, 2018 under all of our nonqualified deferred compensation plans.

  118. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation

  119. Nonqualified Deferred Compensation

    | | Company Contributions in Fiscal 2018 | | Aggregate Earnings in Fiscal 2018 | | Aggregate Balance at September 30, 2018 | | | Name | Deferred Cash Compensation | SERP(1) | Deferred Cash Compensation(2) | SERP(3) | Deferred Cash Compensation(4) | SERP(5) | | Donald R. Horton | — | $100,000 | $503,731 | $375,186 | $9,624,901 | $4,089,244 | | David V. Auld | — | $70,000 | — | $171,400 | — | $1,892,446 | | Michael J. Murray | — | $50,000 | $12,718 | $61,551 | $73,578 | $704,451 | | Bill W. Wheat | — | $50,000 | — | $96,624 | — | $1,077,375 |

  120. Nonqualified Deferred Compensation

    | Represents the amount of unfunded, unsecured liabilities credited by the Company on behalf of each participant in fiscal 2018 under the SERP 2. Such amount is also included in the “All Other Compensation” column of the “Summary Compensation Table” on page 44.(1) |

  121. Nonqualified Deferred Compensation

    | Represents the net amount of earnings on the balance of the participant’s account that is the result of the performance of a variety of independently managed funds available to and selected by each participant under the Deferred Compensation Plan. The Company does not provide a guaranteed or fixed rate of return on these funds. The rate of return on these funds depends on the participant’s investment selections and on the market performance of these funds. These amounts are not included in the “Summary Compensation Table” on page 44 because such amount was not preferential or above-market.(2) |

  122. Nonqualified Deferred Compensation

    | Represents the amount of earnings on the balance of the participant’s account at a rate determined by the SERP 2 plan administrative committee, typically 10% per annum. The portion of earnings considered(3) |

  123. Nonqualified Deferred Compensation

    | above-market are included in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the “Summary Compensation Table” on page 44. |

  124. Nonqualified Deferred Compensation

    | These balances of deferred compensation represent compensation earned in prior years and were included in the Summary Compensation Table in prior year proxy statements in the year earned, to the extent applicable.(4) |

  125. Nonqualified Deferred Compensation

    | Includes amounts of unfunded, unsecured liabilities and the related earnings accrued by the Company on behalf of each participant with respect to the current and prior fiscal years under the SERP 2.(5) |

  126. Potential Payments Upon Termination or Change in Control

    Potential Payments Upon Termination or Change in Control None of our named executive officers has employment or change in control agreements with us specifically providing for payments upon involuntary termination of their employment. However, certain of our benefit and incentive plans contain various provisions regarding termination of employment or change in control. Any additional severance payments would be at the discretion of the Compensation Committee and determined at the time of termination. The following is a summary of the treatment of benefits under our benefit plans for various types of terminations, including upon a change in control. Generally, our benefit plans define “cause” as a violation of the standards of employee conduct set forth in our employee manual and “change in control” as the occurrence of any of the following events: (i) Our merger, consolidation or reorganization into another entity if our stockholders immediately before such transaction do not, immediately after such transaction, own more than 50% of the combined voting power of the outstanding voting securities resulting from such transaction and in substantially the same proportion as their stock ownership prior to the transaction; (ii) We sell all or substantially all of our assets to another entity or we completely liquidate or dissolve; (iii) A person (as defined by Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) becomes the beneficial owner (as the term “beneficial owner” is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of securities representing 20% or more of the combined voting power of the then outstanding voting securities (the threshold for amounts deposited under our SERP 2 plan on or after January 1, 2005 is 50% or 35% acquired in a single transaction or series of transactions in any 12-month period); and (iv) During any two-year period, a majority of the members of the Board serving at the date of the most recent approval of our benefit plan by stockholders is replaced by members of the Board who are not nominated and approved by the Board. For purposes of calculating beneficial ownership pursuant to this paragraph, no voting securities held by our Chairman, Donald R. Horton, as of the date of the adoption of the plan in question or received in any merger transaction shall be included in the calculation.

  127. Table – Potential Payments Upon Termination or Change in Control

    Table – Potential Payments Upon Termination or Change in Control The following table reflects amounts of compensation to be paid to each of the named executive officers in the event of termination of employment or change in control. Because neither the Company nor any of its plans provides for additional benefits related to a change in control termination, if such a termination is triggered, the payments would be as set forth under the applicable column under Termination of Employment. The amounts in the table assume a termination date of September 30, 2018, the last day of our fiscal year, and, if applicable, are based on the closing price of our common stock of $42.18 on September 28, 2018. Because only Mr. Horton had reached the normal retirement age (65 years old) on September 30, 2018, we only included amounts payable upon retirement for him. These amounts are estimates of payments to executives upon termination of employment or a change in control. Actual amounts can only be determined at the time of such executive’s actual separation from the Company or change in control. Factors that could affect these amounts include the timing during the year of any such event, the company’s stock price and the executive’s age. Amounts to be provided to an executive under arrangements that do not discriminate in scope, terms or operation in favor of our executive officers and are available to all salaried employees are not included in the following table in accordance with SEC regulations. In addition to the amounts set forth below, each of the named executive officers would be entitled to receive, upon certain termination events or a change in control, a distribution of his or her outstanding balance of compensation earned in prior years and deferred, at the executive officer’s option, under our Deferred Compensation Plan. The balances of such accounts are set forth and explained in the “Nonqualified Deferred Compensation” table on page 49. The table reflects compensation to be paid based on the listed events if such events occurred on September 30, 2018.

  128. Potential Payments Upon Termination or Change in Control

    Potential Payments Upon Termination or Change in Control

  129. Potential Payments Upon Termination or Change in Control

    | | | Termination of Employment | | | | | | | Name | Payments and Benefits | Voluntary ($) | Normal Retirement ($)(4) | Without Cause ($) | With Cause ($) | Death or Disability ($) | Change in Control ($) | | Donald R. Horton | Severance Pay: | | | | | | | | | Cash | — | — | — | — | — | — | | | Equity | — | — | — | — | — | — | | | 2019 Restricted Stock Units(1) | 5,624,000 | 5,624,000 | 5,624,000 | — | 5,624,000 | 5,624,000 | | | 2020 Restricted Stock Units(2) | 2,812,000 | 2,812,000 | 2,812,000 | — | 2,812,000 | 2,812,000 | | | Vesting of Equity Awards: | | | | | | | | | Stock Options | — | — | — | — | — | — | | | Time-Vesting Restricted Stock Units(3) | — | 6,254,577 | — | — | 6,254,577 | 6,254,577 | | | Payments of SERP 2 Contributions | 4,089,244 | 4,089,244 | 4,089,244 | — | 4,089,244 | 4,089,244 | | | Total | 12,525,244 | 18,779,821 | 12,525,244 | — | 18,779,821 | 18,779,821 | | David V. Auld | Severance Pay: | | | | | | | | | Cash | — | — | — | — | — | — | | | Equity | — | — | — | — | — | — | | | 2019 Restricted Stock Units(1) | 2,812,000 | — | 2,812,000 | — | 2,812,000 | 2,812,000 | | | 2020 Restricted Stock Units(2) | 1,406,000 | — | 1,406,000 | — | 1,406,000 | 1,406,000 | | | Vesting of Equity Awards: | | | | | | | | | Stock Options | — | — | — | — | 617,640 | 617,640 | | | Time-Vesting Restricted Stock Units(3) | — | — | — | — | 2,619,336 | 2,619,336 | | | Payments of SERP 2 Contributions | 1,892,446 | — | 1,892,446 | — | 1,892,446 | 1,892,446 | | | Total | 6,110,446 | — | 6,110,446 | — | 9,347,422 | 9,347,422 | | Michael J. Murray | Severance Pay: | | | | | | | | | Cash | — | — | — | — | — | — | | | Equity | — | — | — | — | — | — | | | 2019 Restricted Stock Units(1) | 843,600 | — | 843,600 | — | 843,600 | 843,600 | | | 2020 Restricted Stock Units(2) | 421,800 | — | 421,800 | — | 421,800 | 421,800 | | | Vesting of Equity Awards: | | | | | | | | | Stock Options | — | — | — | — | 485,040 | 485,040 | | | Time-Vesting Restricted Stock Units(3) | — | — | — | — | 3,358,372 | 3,358,372 | | | Payments of SERP 2 Contributions | 704,451 | — | 704,451 | — | 704,451 | 704,451 | | | Total | 1,969,851 | — | 1,969,851 | — | 5,813,263 | 5,813,263 | | Bill W. Wheat | Severance Pay: | | | | | | | | | Cash | — | — | — | — | — | — | | | Equity | — | — | — | — | — | — | | | Vesting of Equity Awards: | | | | | | | | | Stock Options | — | — | — | — | 617,640 | 617,640 | | | Time-Vesting Restricted Stock Units(3) | 1,405,986 | — | 1,405,986 | — | 6,310,972 | 6,310,972 | | | Payments of SERP 2 Contributions | 1,077,375 | — | 1,077,375 | — | 1,077,375 | 1,077,375 | | | Total | 2,483,361 | — | 2,483,361 | — | 8,005,987 | 8,005,987 |

  130. Potential Payments Upon Termination or Change in Control

    | Mr. Horton, Mr. Auld and Mr. Murray were awarded a target number of 200,000, 100,000 and 30,000 2019 Performance RSUs, respectively, for the performance period of October 1, 2016 through September 30, 2019. Pro-rata vesting may occur based on the number of months served from October 1, 2016 in the event of voluntary termination, normal retirement or without cause termination after completion of the performance period. With respect to death or disability, the 2019 Performance RSUs vest pro-rata based on time passed. Upon a change in control, the Committee may accelerate vesting of part or all of the 2019 Performance RSUs. With respect to an event of voluntary termination, normal retirement, without cause termination, death, disability or a change in control, the 2019 Performance RSUs are valued at $42.18 per unit, the closing price of our stock on September 28, 2018. The value in the table reflects pro-rata vesting (two of three years completed) based on time passed as if an event of voluntary termination, normal retirement, without cause termination, death, disability or a change in control had occurred on September 30, 2018.(1) |

  131. Potential Payments Upon Termination or Change in Control

    | Mr. Horton, Mr. Auld and Mr. Murray were awarded a target number of 200,000, 100,000 and 30,000 2020 Performance RSUs, respectively, for the performance period of October 1, 2017 through September 30, 2020. Pro-rata vesting may occur based on the number of months served from October 1, 2017 in the event of voluntary termination, normal retirement or without cause termination after completion of the performance period. With respect to death or disability, the 2020 Performance RSUs vest pro-rata based on time passed. Upon a change in control, the Committee may accelerate vesting of part or all of the 2020 Performance RSUs. With respect to an event of voluntary termination, normal retirement, without cause termination, death, disability or a change in control, the 2020 Performance RSUs are valued at $42.18 per unit, the closing price of our stock on September 28, 2018. The value in the table reflects pro-rata vesting (one of three years completed) based on time passed as if an event of voluntary termination, normal retirement, without cause termination, death, disability or a change in control had occurred on September 30, 2018. The 2020 Performance RSUs are discussed in more detail under the heading “2018 Fiscal Year – Award of 2020 Performance Restricted Stock Units – Potential Vesting at September 30, 2020 and Award of Restricted Stock Units – Time-Based Vesting” on page 34.(2) |

  132. Potential Payments Upon Termination or Change in Control

    | For Mr. Horton, Mr. Auld and Mr. Murray, the time-vesting RSU amounts represent each officer’s unvested portion of RSUs, as shown in the “Number of Shares or Units of Stock That Have Not Vested” column of the “Outstanding Equity Awards at Fiscal Year-End” table on page 47, valued at $42.18 per unit, the closing price of our stock on September 28, 2018. The value in the table reflects accelerated vesting if an event of voluntary termination, normal retirement, termination without cause, death or disability, or change in control had occurred on September 30, 2018. For Mr. Wheat, the time-vesting RSU amounts under voluntary and termination without cause represent the amount of accelerated vesting based on a pro-rata portion of his November 2, 2017, November 2, 2016 and November 4, 2015 grants, valued at $42.18 per unit, the closing price of our stock on September 28, 2018. The time-vesting RSU amounts under death, disability or a change of control represents his unvested portion of RSUs as shown in the “Number of Shares or Units of Stock That Have Not Vested” column of the “Outstanding Equity Awards at Fiscal Year-End” table on page 47, valued at $42.18 per unit, the closing price of our stock on September 28, 2018. Additional information on the time-vesting RSUs granted in fiscal 2018 is set forth in footnote 3 to the “Grants of Plan-Based Awards” table on page 46.(3) |

  133. Potential Payments Upon Termination or Change in Control

    | Because only one of our named executive officers has reached the normal retirement age (65 years old) under our applicable plans on September 30, 2018, we only included amounts under the “Normal Retirement” column for that one officer.(4) |

  134. CEO PAY RATIO

    CEO PAY RATIO As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the total annual compensation of our median compensated employee and the total annual compensation of Mr. Auld, our President and Chief Executive Officer. To identify the median compensated employee, we used the following methodology:

  135. CEO PAY RATIO

    | • | We used September 30, 2018 as the date to determine the median employee. At that date, we had approximately 8,400 employees consisting of full-time, part-time and temporary employees. Other than our CEO, all employees as of such date were included in our population. |

  136. CEO PAY RATIO

    | • | To identify the median employee from our employee population, we obtained a listing of total compensation paid to each employee during fiscal 2018. For this purpose, total compensation included salary or wages, as applicable, commissions, bonuses, equity awards that vested or were exercised during the year, and any other cash compensation. Such amounts were obtained from our payroll records. We annualized the salaries and wages of our full and part-time employees who were not employed for the entire fiscal year. The above-described compensation measure was consistently applied to all employees. |

  137. CEO PAY RATIO

    Once we identified our median employee, we calculated the employee’s total annual compensation using the same methodology used to calculate the total compensation of our CEO in the “Summary Compensation Table” on page 46. In addition to the amounts required to be reported as compensation in the Summary Compensation Table, we included the dollar value of employer paid non-discriminatory health insurance benefits in the total annual compensation of our median employee and of our CEO to better reflect our employee compensation practices. For the fiscal year ended September 30, 2018:

  138. CEO PAY RATIO

    | • | The total compensation of our median employee was $92,304. |

  139. CEO PAY RATIO

    | • | The total compensation of our CEO was $14,886,528. |

  140. CEO PAY RATIO

    Accordingly, for fiscal 2018, the ratio of the total compensation of Mr. Auld, our CEO, to the total compensation of the median compensated of all employees (excluding Mr. Auld), was 161 to 1. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, our pay ratio disclosure may not be comparable to the pay ratio disclosures reported by other companies.