DEF 14A of Horton D R Inc /De/, Dec 13, 2022

DEF 14A of Horton D R Inc /De/

Filed Dec 13, 2022 · FY20220001193125-22-303898

Open on EDGAR

  1. DONALD R. HORTON

    | Nonqualified Deferred Compensation Plans | 47 | | Potential Payments Upon Termination or Change in Control | 48 | | CEO PAY RATIO | 52 | | INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS | 53 | | Audit Fees and All Other Fees | 53 | | Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services | 53 | | Audit Committee Report | 54 | | PROPOSAL THREE — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 55 | | Vote Required | 55 | | BENEFICIAL OWNERSHIP OF COMMON STOCK | 56 | | Management | 56 | | Certain Other Beneficial Owners | 57 | | CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS | 58 | | GENERAL INFORMATION | 61 | | Time, Place and Purposes of Meeting | 61 | | Solicitation of Proxies | 61 | | Revocation and Voting of Proxies | 61 | | Outstanding Shares and Voting Rights | 61 | | Quorum Requirement | 62 | | Vote Required | 62 | | Stockholders Sharing the Same Address | 63 | | Future Stockholder Communications through the Internet | 63 | | Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held January 18, 2023 | 63 | | STOCKHOLDER PROPOSALS FOR 2024 ANNUAL MEETING | 64 | | REQUESTING DOCUMENTS FROM THE COMPANY | 65 | | OTHER MATTERS | 65 |

  2. Information Regarding the Director Nominees

    Information Regarding the Director Nominees The following table, matrix and biographical descriptions set forth certain information with respect to the nominees for election as directors at the 2023 Annual Meeting, based upon information furnished by each director. The matrix below also represents some of the key skills that our Board has identified as particularly valuable to the effective oversight of the Company and the execution of our strategy. This matrix highlights the depth and breadth of skills of our current directors.

  3. Board of Directors Summary

    Board of Directors Summary

  4. Board of Directors Summary

    | | | | Skills, Experience and Attributes | | | | | | Nominees and Primary Occupation | Independent | Committee Membership (C = Chair) | Real Estate/ Home- building | Leadership & Strategy | Finance, Accounting and/or Investment | Outside Board Experience | Gender/ Ethnic Diversity | | Donald R. Horton Executive Chairman, D.R. Horton, Inc. | | Executive (C) | ✓ | ✓ | ✓ | | | | Barbara K. Allen Retired Partner, Avondale Partners | ✓ | Compensation (C), Nominating and Governance | ✓ | ✓ | ✓ | | ✓ | | Brad S. Anderson Vice Chair, Cushman & Wakefield | ✓ | Audit, Compensation | ✓ | ✓ | ✓ | ✓ | | | Michael R. Buchanan Retired Sr. Advisor, Banc of America Securities | ✓ | Nominating and Governance | ✓ | ✓ | ✓ | ✓ | | | Benjamin S. Carson, Sr. Former Secretary of U.S. HUD | ✓ | Audit, Nominating and Governance (C) | ✓ | ✓ | ✓ | ✓ | ✓ | | Maribess L. Miller Retired Partner, PwC | ✓ | Audit (C)*, Compensation | | ✓ | ✓ | ✓ | ✓ |

  5. Board of Directors Summary

    | Audit Committee Financial Expert* |

  6. Director Nominees

    Director Nominees

  7. Director Nominees

    | Age: 72 Director Since: 1991 Term Expires: 2023 Committees: Executive (Chair) | | | | | Donald R. Horton Executive Chairman of the Board Mr. Horton is 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. He has been involved in the real estate and homebuilding industries since 1972. • Executive Chairman, D.R. Horton, Inc. (1991 to present) Mr. Horton, his family and their affiliated entities, beneficially own a significant number of shares of the Company’s common stock as set forth in the Beneficial Ownership tables beginning on page 56. Real Estate/Homebuilding Leadership & Strategy Financial, Accounting and/or Investment | Key Qualifications: • Mr. Horton’s over 40 years of leadership experience in the homebuilding industry provides valuable perspective and expertise to the Board and to the Company. • As founder of the Company and a continuing active member of the management team, Mr. Horton has a unique understanding of all aspects of the homebuilding business, and his leadership and strategic vision provide the Board and the Company with distinct advantages in the homebuilding industry. |

  8. Director Nominees

    | Age: 76 Director Since: 2014 Term Expires: 2023 Committees: Compensation (Chair), Nominating and Governance | | | | | Barbara K. Allen Retired Partner, Avondale Partners Ms. Allen has significant experience researching, analyzing and making investment decisions related to housing-related companies. • Partner and Analyst of Housing, Construction and Retailing, Avondale Partners (2004 until retirement in 2006) • Home Construction, Building Materials, Home Furnishing and DIY Retailing Analyst for Natexis Bleichroeder, Inc. (1997–2004) • Vice President, Equity Research for Donaldson, Lufkin & Jenrette (1993–1996) Real Estate/Homebuilding Leadership & Strategy Financial, Accounting and/or Investment | Key Qualifications: • Ms. Allen’s extensive experience as an analyst and consultant to homebuilding-related companies provides valuable investor perspective to the Board, enhancing the Board’s ability to oversee important strategic decisions related to investment, operating and financing matters. |

  9. Director Nominees

    | Age: 61 Director Since: 1998 Term Expires: 2023 Committees: Audit, Compensation | | | | | Brad S. Anderson Vice Chair of Cushman & Wakefield Mr. Anderson has significant experience in leadership roles in homebuilding and real estate industries. • Vice Chair of Cushman & Wakefield, a global real estate services firm (2021 to present) • Executive Vice President of CBRE Group, Inc., an international real estate brokerage company (2009–2021) • Various leadership positions, CB Commercial Real Estate Group, Inc., (1987–2009) • Director, KS StateBank (2016 to present) • Interim Chair of the Board of Continental Homes Holding Corp. (1997–1998 when it merged with D.R. Horton) Real Estate/Homebuilding Leadership & Strategy Financial, Accounting and/or Investment Public Company Board/ Corporate Governance | Key Qualifications: • Mr. Anderson’s extensive real estate industry experience and his current active leadership role with an international real estate services firm brings beneficial insight and perspective to the Board, as many factors that affect the real estate brokerage industry also affect the homebuilding industry. |

  10. Director Nominees

    | Age: 75 Director Since: 2003 Term Expires: 2023 Committees: Nominating and Governance | | | | | Michael R. Buchanan Retired Sr. Advisor, Banc of America Securities Mr. Buchanan has significant commercial banking experience with several banking institutions serving the real estate and homebuilding sectors. • Senior Advisor, Banc of America Securities (2002–2003) • Managing Director, Head of National Real Estate Banking Group, Bank of America (1998 until retirement in 2002) • Executive Vice President of NationsBank, which later merged with Bank of America (1990–1998) • Director, Piedmont Office Realty Trust (NYSE: PDM) (2015–2021) Real Estate/Homebuilding Leadership & Strategy Financial, Accounting and/or Investment Public Company Board/ Corporate Governance | Key Qualifications: • Mr. Buchanan is a highly experienced commercial banker who served the real estate and homebuilding sectors. His experience in these areas provides the Board with a broad understanding of the key drivers of the credit markets and financing considerations through multiple economic cycles, including their effects on the homebuilding industry. |

  11. Director Nominees

    | Age: 71 Director Since: 2021 Term Expires: 2023 Committees: Audit, Nominating and Governance (Chair) | | | | | Benjamin S. Carson, Sr. Former Secretary of U.S. HUD Dr. Carson has significant leadership experience in governmental, regulatory and medical roles. • 17(th) Secretary of the U.S. Department of Housing and Urban Development (HUD) (2017–2021) • Led programs focused on advancing economic opportunity; providing safe, fair and affordable housing; spurring reinvestment in communities; reducing homelessness; assisting self-sufficiency to underserved and vulnerable populations; and helping disaster victims • Led the collaboration of eight federal agencies to establish the White House Council on Eliminating Regulatory Barriers to Affordable Housing • Distinguished career in the field of medicine including: • Director of the Division of Pediatric Neurosurgery at the Johns Hopkins Medical Institutions (1984–2013) • Professor of Neurological Surgery, Oncology, Plastic Surgery and Pediatrics at the Johns Hopkins Medical Institutions (1999–2013) • Director, Sinclair Broadcast Group, Inc. (NYSE: SBGI) (June 2022 to present) • Director, Covenant Logistics Group, Inc. (NASDAQ: CVLG) (2021 to present) • Director, Costco Wholesale Corporation (NASDAQ: COST) (1999–2015) • Director, Kellogg Company (NYSE: K) (1997–2015) Real Estate/Homebuilding Leadership & Strategy Financial, Accounting and/or Investment Public Company Board/ Corporate Governance | Key Qualifications: • Dr. Carson gained extensive management and leadership experience during both his service as HUD Secretary and his many contributions to the medical field. • His leadership positions, particularly in overseeing significant capital investments, developing multiple housing initiatives, emphasizing fiscal responsibility and the reduction of regulatory barriers while at HUD, enable Dr. Carson to provide valuable perspective to the Board and its Committees. • Dr. Carson also contributes governance expertise having served on the boards of directors of other S&P 500 companies. |

  12. Director Nominees

    | Age: 69 Director Since: 2019 Term Expires: 2023 Committees: Audit (Chair and Financial Expert), Compensation | | | | | Maribess L. Miller Retired Partner, PricewaterhouseCoopers Ms. Miller, a certified public accountant, has significant experience with both public and private companies gained from leading auditing and consulting engagements. • Practice Partner, PricewaterhouseCoopers (PwC) (1984 until retirement in 2009) • Managing Partner, North Texas Market (2002 to 2009) • Practice Leader, the Southwest Region Consumer, Industrial and Energy practice (1998 to 2002) • Managing Partner of PwC’s US Healthcare Audit Practice (1995 to 1998) • Director, Triumph Financial, Inc., formerly Triumph Bancorp, Inc., (NYSE: TFIN) (2014–present) • Director, Zix Corporation (2010 until acquisition by OpenText in 2021) Real Estate/Homebuilding Leadership & Strategy Financial, Accounting and/or Investment Public Company Board/ Corporate Governance | Key Qualifications: • Ms. Miller gained extensive experience in the auditing and business consulting fields, knowledge of public and private companies across multiple industries, and significant leadership experience as a managing partner for PwC in several key positions throughout her 34-year career. |

  13. Director Nominees

    Our governance structures predicated on our Corporate Governance Principles ensure robust independent oversight of management and accountability to stockholders.

  14. Director Nominees

    | Governance Principles | Corporate Governance Practice | | Accountability to our Stockholders | ✓ Our common stock is our only class of stock, with one vote per share. | | | ✓ Our stockholders elect directors for one-year terms by a majority vote standard. | | | ✓ Our Bylaws permit stockholder proxy access. | | | ✓ We do not have a “poison pill” or similar anti-takeover provision in place. | | Board Independence | ✓ Five of our six director nominees are independent. | | | ✓ We have a separate chairman and chief executive officer and an independent presiding director. | | | ✓ Our independent directors regularly meet in executive sessions. | | | ✓ All the members of our three standing Board committees—Audit, Compensation and Nominating and Governance—are independent. | | Board Diversity | ✓ Two of our six directors are women, and one director is ethnically diverse. | | | ✓ Director gender and ethnic diversity is supported by our candidate recruitment policy. | | | ✓ All of the key Board committee chairs and our Presiding Director are either female or ethnically diverse. | | Board Policies and Practices | ✓ Our Board annually reviews its performance, as well as the performance of each of its standing committees. | | | ✓ Our Board actively engages in chief executive officer succession planning and reviews succession plans for our other executives annually. | | | ✓ Our Nominating and Governance Committee oversees risks associated with overall governance and Board succession planning and ESG. | | | ✓ Our Compensation Committee evaluates our CEO’s performance annually. | | | ✓ Our Audit Committee oversees cybersecurity risk. | | Risk Mitigation and Alignment of Interests | ✓ We have robust stock ownership guidelines for executive officers and directors. | | | ✓ In fiscal 2022, we adopted a clawback policy that applies to both cash and equity incentives and is triggered by either a financial restatement or other material harm to the Company. | | | ✓ Our directors and executive officers may not engage in pledging or hedging transactions or other transactions designed to hedge or offset any decrease in the market value of our Company stock. | | | ✓ No executive officer or director has any shares of Company stock pledged or hedged. |

  15. Compensation of Directors

    Compensation of Directors Our Board of Directors approves the annual compensation and fees paid to our non-employee directors, each of whom is listed in the “Director Compensation for Fiscal 2022” table. The Board’s goal is to set non-employee director compensation at a reasonable level of cash and equity compensation. The total annual compensation of directors has varied primarily due to the timing of awarding retainer restricted stock unit awards every three years. Our Chairman, a member of executive management, does not receive any additional compensation for serving on the Board of Directors. Director Fees Paid in Cash. Non-employee directors are paid cash compensation based on the number of meetings attended in person, by telephone conference or virtually, the number of committees on which they serve and the number of committees for which they serve as Chair. In fiscal 2022, compensation for attending the meetings was $15,000 for the first quarterly meeting and $17,500 for each of the subsequent three meetings, not to exceed $70,000 for a calendar year. Additional compensation of $5,000 annually is paid for each committee on which a director serves, and $2,500 annually is paid to each committee chair. All compensation is paid quarterly and on a pro-rata basis if the composition of the committees changes during the year. Director Retainer Fees Paid in Restricted Stock Units. In addition to the cash fees described above, every three years our non-employee directors receive grants of restricted stock units that vest annually in equal installments over three years. In January 2022, each of our non-employee directors received a retainer grant of 5,244 restricted stock units as reflected in the Director Compensation table that follows. Prior to these 2022 awards, such retainer grants were made in January of 2019. Restricted Stock Units. Our non-employee directors are also granted restricted stock units on an annual basis at the time Board and the Committee grant restricted stock units to a broad group of Company employees. Each of Ms. Allen, Mr. Anderson, Mr. Buchanan, Dr. Carson, Mr. Hewatt and Ms. Miller received a grant of 1,120 restricted stock units in March 2022 as reflected in the Director Compensation table that follows. These restricted stock units vest ratably over five years. In addition, when a new non-employee director joins our Board, the Board of Directors may award restricted stock units to the new non-employee director. Expenses and Health Care Plan. Each non-employee 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-employee director is also eligible to participate in the Company’s broad-based health care plan, and Ms. Allen, Mr. Anderson, Mr. Buchanan and Mr. Hewatt each elected to participate in the plan in fiscal 2022.

  16. Director Compensation for Fiscal 2022

    Director Compensation for Fiscal 2022

  17. Director Compensation for Fiscal 2022

    | Name(1) | Fees Earned or Paid in Cash(2) | Stock Awards(3) | Total | | Barbara K. Allen | $80,000 | $519,909 | $599,909 | | Brad S. Anderson | $72,500 | $519,909 | $592,409 | | Michael R. Buchanan | $72,500 | $519,909 | $592,409 | | Benjamin S. Carson, Sr. | $72,500 | $519,909 | $592,409 | | Michael W. Hewatt(4) | $75,000 | $519,909 | $594,909 | | Maribess L. Miller | $85,000 | $519,909 | $604,909 |

  18. Director Compensation for Fiscal 2022

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

  19. Director Compensation for Fiscal 2022

    | Amounts represent fees paid in cash during fiscal 2022.(2) |

  20. Director Compensation for Fiscal 2022

    | The amounts represent the grant date fair value of $83.20 per unit for the 5,244 restricted stock units granted to each non-employee director on January 26, 2022, which restricted stock units vest ratably over three years, and $74.65 per unit for the 1,120 restricted stock units granted to each non-employee director on March 30, 2022, which restricted stock units vest ratably over five years.(3) |

  21. Director Compensation for Fiscal 2022

    | The grant date fair value of the restricted stock units was determined in accordance with the accounting guidance for share-based payments. The Company recognizes expense for these awards over the respective vesting period. |

  22. Director Compensation for Fiscal 2022

    | Mr. Hewatt served as a director until his death in August 2022 at which time all of his unvested restricted stock units automatically vested.(4) |

  23. Director Compensation for Fiscal 2022

    As of September 30, 2022, each non-employee director held the following number of unvested restricted stock units:

  24. Director Compensation for Fiscal 2022

    | Name | Unvested Restricted Stock Units | | Barbara K. Allen | 9,933 | | Brad S. Anderson | 9,933 | | Michael R. Buchanan | 9,933 | | Benjamin S. Carson, Sr. | 8,540 | | Maribess L. Miller | 14,190 |

  25. Director Compensation for Fiscal 2022

    PROPOSAL TWO – ADVISORY VOTE ON THE APPROVAL OF EXECUTIVE COMPENSATION Proposal Two – Advisory Vote on the Approval of Executive Compensation As required pursuant to Section 14A of the Securities Exchange Act, our stockholders are being asked to approve a non-binding advisory resolution on the compensation of our named executive officers, as disclosed in this Proxy Statement. Although this “say-on-pay” resolution is non-binding, our Board of Directors and Compensation Committee welcome your opinion and will consider the result of the vote when making future compensation decisions. Our Board has determined to hold an annual advisory vote on executive compensation, and we anticipate our next advisory vote on executive compensation after our 2023 Annual Meeting of Stockholders will be held at our 2024 Annual Meeting of Stockholders. We encourage you to read the Compensation Discussion and Analysis beginning on page 25 of this Proxy Statement, which describes in detail how our executive compensation policies and procedures are designed and operate to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables, notes and narrative, which provide detailed information on the compensation of our named executive officers and the changes we made to our fiscal 2022 compensation programs in direct response to stockholder feedback. We believe that our current executive compensation program achieves an appropriate balance of short-term and long-term compensation incentives, reinforces the link between executive pay and the Company’s long-term performance and stock value, and thereby aligns the interests of our named executive officers with those of our stockholders. In accordance with Section 14A of the Exchange Act, we are asking our stockholders to approve the following advisory resolution at the 2023 Annual Meeting: RESOLVED, that the stockholders of D.R. Horton, Inc. (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 2023 Annual Meeting of Stockholders.

  26. Director Compensation for Fiscal 2022

    | | The Board of Directors Unanimously Recommends that Stockholders Vote “FOR” Approval of the Advisory Resolution on Executive Compensation. |

  27. Director Compensation for Fiscal 2022

    EXECUTIVE OFFICERS Executive Officers Our executive officers for fiscal 2022 are:

  28. Director Compensation for Fiscal 2022

    | Donald R. Horton Executive Chairman | David V. Auld President and Chief Executive Officer | Michael J. Murray Executive Vice President and Co-Chief Operating Officer | Paul J. Romanowski Executive Vice President and Co-Chief Operating Officer | Bill W. Wheat Executive Vice President and Chief Financial Officer |

  29. 2022 Key Compensation Actions Explained

    2022 Key Compensation Actions Explained Establishing a dollar cap for pre-tax income (PTI) incentive payout. While appreciating that the PTI-based annual incentive (PTI Bonus) is only earned in line with the Company’s profit generation, stockholders expressed a strong preference that the incentive payout be capped. For the PTI Bonus earned for fiscal 2021, the Compensation Committee placed a $10 million limit on the portion of PTI Bonus that could be paid in cash to Mr. Horton and Mr. Auld, with the remaining earned incentive to be paid in shares of the Company’s common stock. Following stockholder input, for the PTI Bonus earned for fiscal 2022, the Compensation Committee further limited the amount payable in cash to Mr. Horton and Mr. Auld to $7 million, and instituted a matching $7 million limit on the value of earned PTI Bonuses that could be paid in shares of the Company’s common stock, effectively capping the maximum award payable under the PTI Bonus to $14 million for each of Mr. Horton and Mr. Auld. For fiscal 2022, the Compensation Committee limited the amount payable in cash for the PTI Bonus to Mr. Murray and Mr. Romanowski to $10 million. Reducing the PTI percentage for all eligible NEOs. Based on feedback received from stockholders, the Compensation Committee revised the PTI Bonus program to implement a significant reduction to the PTI payout percentage for each of Mr. Horton, Mr. Auld, Mr. Murray and Mr. Romanowski. For the PTI Bonus earned for fiscal 2022, Mr. Horton, Mr. Auld, Mr. Murray and Mr. Romanowski will be eligible to earn 0.20%, 0.20%, 0.10%, and 0.10% respectively, of the Company’s PTI, a significant reduction from the fiscal 2021 PTI payout percentages of 0.60%, 0.40%, 0.15% and 0.15%, respectively. The reduced payouts remain subject to the maximum dollar caps adopted by the Compensation Committee, as discussed above. Increasing emphasis on equity incentives. Any equity granted to Mr. Horton or Mr. Auld under the PTI Bonus program is subject to a further 2-year holding period after the award is earned. In addition, the Compensation Committee has committed that long-term incentives, with a minimum vesting period of 3 years, would comprise a higher percentage of target NEO compensation for fiscal 2022 and beyond. The Compensation Committee believes that this action will increase the retentive value of the incentives as well as further align pay outcomes with long-term stockholder value creation. For fiscal 2022, 74% of each of our Chairman’s and CEO’s total target compensation opportunities were in the form of equity incentives. Enhancing performance thresholds and targets. Stockholders expressed a strong preference that performance-based equity incentives should target above-median performance levels in order to earn the targeted payout. In response, the Compensation Committee increased both the threshold and target performance levels required for payouts under the Company’s performance-based equity plan. For the return on investment (ROI), selling, general and administrative expense (SG&A) and gross profit (GP) portions of the performance based RSUs granted in fiscal 2022, the threshold performance requires a ranking of at least the 6th out of 10 (an increase from the 9th rank previously required), and target performance requires a ranking of at least 3rd out of 10 (an increase from the 5th rank previously required). The Compensation Committee believes these increases further strengthen the pay-for-performance link, requiring superior performance for target payouts. Adopting a clawback policy. In direct response to stockholder feedback, the Compensation Committee adopted a clawback policy that applies to both cash and equity incentives, with the clawback being triggered by any financial restatement as well as other material harm to the Company. The Compensation Committee believes that the clawback policy, in conjunction with our existing stock ownership guidelines and policy that prohibits the hedging and pledging of the Company’s common stock, will further minimize compensation risk and strengthen the alignment of executives’ interests with those of long-term stockholders.

  30. Our Executive Compensation Principles Drive our Compensation Design

    | Executive Compensation Principles | Executive Compensation Objectives | | Business Resilience | ✓ Achieve long-term sustainability of our business | | Alignment of Interests | ✓ Align our executives’ interests with stockholders’ interests with the goal of maximizing long-term stockholder value | | Pay-for-Performance | ✓ Award compensation that recognizes valuable short- and long-term individual performance as well as the Company’s overall performance | | Attract and Retain | ✓ Motivate and retain highly qualified and experienced executives |

  31. Our Executive Compensation Principles Drive our Compensation Design

    | Design Feature | Rationale and Impact | Business Resilience | Alignment of Interests | Pay for Performance | Attract and Retain | | Emphasize At-Risk and Performance-based Compensation | • 89% of fiscal 2022 CEO Target Pay at risk | ✓ | ✓ | ✓ | | | Balance Short- and Long-term Incentives | • Reward executives for actions that will create short- and long-term stockholder value | ✓ | ✓ | ✓ | ✓ | | Equity Pay Mix | • Significant majority of equity granted as Performance RSUs | ✓ | ✓ | ✓ | ✓ | | Annual Cash and Equity Incentive Tied to Profitability | • Reward executives for increased profitability which creates stockholder value | ✓ | ✓ | ✓ | ✓ | | | • No guaranteed bonuses | | | | | | Stock Ownership Guidelines | • Ensure alignment of executive interests with those of long-term stockholders | | ✓ | ✓ | | | Clawback and Anti-hedging and Pledging Policies | • Mitigate compensation risk and ensure strong alignment with stockholder interests | ✓ | ✓ | ✓ | |

  32. Chairman

    | | 87% At-Risk | | | | | 3% Base Salary | 23% PTI Bonus (Cash Portion) | 23% PTI Bonus (Equity Portion) | 41% Performance Units | 10% Time RSUs | | 26% Cash | | 74% Long-Term Equity | | |

  33. CEO

    | | 89% At-Risk | | | | | 2% Base Salary | 24% PTI Bonus (Cash Portion) | 24% PTI Bonus (Equity Portion) | 41% Performance Units | 9% Time RSUs | | 26% Cash | | 74% Long-Term Equity | | |

  34. Components of Compensation

    | Given his role and the nature of his responsibilities, Mr. Wheat does not participate in the PTI Bonus program, but rather receives a cash bonus in an amount determined by the Compensation Committee based on performance of his responsibilities and overall Company performance.(1) |

  35. Cash Compensation: Base Salaries and Performance Bonuses

    Cash Compensation: Base Salaries and Performance Bonuses

  36. 2022 Fiscal Year - Pre-Tax Income Performance Bonus

    2022 Fiscal Year - Pre-Tax Income Performance Bonus Chairman, Chief Executive Officer and Co-Chief Operating Officers. During fiscal 2022, in line with our compensation philosophy to award incentive bonuses based on performance, Mr. Horton, Mr. Auld, Mr. Murray and Mr. Romanowski each had the opportunity to earn a performance bonus (PTI Bonus) based on the Company’s pre-tax income earned during the year. “Pre-tax income” or “PTI” 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. The PTI Bonus focuses Mr. Horton, Mr. Auld, Mr. Murray and Mr. Romanowski on generating and increasing pre-tax income. We believe that increases in pre-tax income result in increases in the value of the Company, which benefits all of our long-term stockholders. The maximum payout percentages for the PTI Bonus in fiscal 2022 are included in the table below. The Compensation Committee sets these percentages each year at the beginning of the fiscal year. The Compensation Committee has discretion to adjust the PTI Bonus downward, but not upward. Background. To link pay and performance, the combined annual incentive bonus for the Company’s Chairman, CEO and Co-COOs has historically been based on a percentage of the Company’s pre-tax income. The Compensation Committee believes that strong profitability puts the Company in excellent position to achieve its long-term performance goals. For fiscal 2022, the Compensation Committee believed that by using a percentage of pre-tax income, we would incentivize Mr. Horton, Mr. Auld, Mr. Murray and Mr. Romanowski to achieve higher levels of pre-tax income, which aligns their interests with those of our stockholders. The following PTI payout percentages were initially selected for the PTI Bonuses based on historical practices and a subjective Compensation Committee analysis, rather than any formulaic methodology: 0.60% for Mr. Horton, 0.40% for Mr. Auld, 0.15% for Mr. Murray and 0.15% for Mr. Romanowski. These maximum percentages were subjectively determined, and the Compensation Committee reserved the right to use its discretion to adjust downward, but not upward, the final earned PTI Bonus amounts. Recent Actions. In March 2022, based on feedback received from our stockholders, the Compensation Committee reduced the PTI percentage payout from 0.60%, 0.40%, 0.15% and 0.15% for Mr. Horton, Mr. Auld, Mr. Murray and Mr. Romanowski, respectively, to 0.20% for both Mr. Horton and Mr. Auld, and to 0.10% for both Mr. Murray and Mr. Romanowski, significantly reducing the annual incentive payout for the 2022 performance periods. In addition to reducing the PTI percentage payout, the Compensation Committee revised the maximum annual individual total payout cap for the PTI Bonus to $14 million for Mr. Horton and Mr. Auld and instituted a $10 million individual maximum annual payout cap for Mr. Murray and Mr. Romanowski. For Mr. Horton and Mr. Auld, the payout earned is equally split between cash and company stock, with the equity portion of the award being subject to a 2-year holding period.

  37. Pre-Tax Income Performance Bonus Percentages

    Pre-Tax Income Performance Bonus Percentages

  38. Pre-Tax Income Performance Bonus Percentages

    | | | Maximum Bonus Potential | | | Name | Fiscal 2022 Performance Goal | 1st Semi-Annual Period | 2nd Semi-Annual Period | | Donald R. Horton | Pre-Tax Income | 0.20% | 0.20% | | David V. Auld | Pre-Tax Income | 0.20% | 0.20% | | Michael J. Murray | Pre-Tax Income | 0.10% | 0.10% | | Paul J. Romanowski | Pre-Tax Income | 0.10% | 0.10% |

  39. Pre-Tax Income Performance Bonus Percentages

    The 1st semi-annual period was the six months ended March 31, 2022 (first and second quarters of fiscal 2022) and the 2nd semi-annual period was the six months ended September 30, 2022 (third and fourth quarters of fiscal 2022). 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 PTI Bonus. The bonuses paid under the PTI Bonus program were paid as set forth in the tables on the next page.

  40. 2022 Fiscal Year – Pre-Tax Income Performance Bonus Results and Payout

    2022 Fiscal Year – Pre-Tax Income Performance Bonus Results and Payout The tables below set forth the Company’s pre-tax income (PTI) and PTI Bonuses paid in cash and stock for fiscal 2022 to Mr. Horton, Mr. Auld, Mr. Murray and Mr. Romanowski:

  41. 2022 Fiscal Year – Pre-Tax Income Performance Bonus Results and Payout

    | Donald R. Horton — Chairman | | | | | | | | | Maximum Bonus Percentage | Total Bonus Earned | Portion of Bonus Paid | | | Semi-Annual Period | PTI | | | Cash | Stock | | 1st Semi-Annual Period Ended March 31, 2022 | $3,380,609,289 | 0.20% | $6,761,219 | $3,380,680 | $3,380,539 | | 2nd Semi-Annual Period Ended September 30, 2022 | $4,249,139,719 | 0.20% | $8,498,279 | $3,619,458 | $3,619,323 | | Annual Amount | $7,629,749,008 | 0.20% | $15,259,498 | $7,000,138 | $6,999,862 | | | | Max Payout | $14,000,000 | | | | David V. Auld — Chief Executive Officer | | | | | | | | | Maximum Bonus Percentage | Total Bonus Earned | Portion of Bonus Paid | | | Semi-Annual Period | PTI | | | Cash | Stock | | 1st Semi-Annual Period Ended March 31, 2022 | $3,380,609,289 | 0.20% | $6,761,219 | $3,380,680 | $3,380,539 | | 2nd Semi-Annual Period Ended September 30, 2022 | $4,249,139,719 | 0.20% | $8,498,279 | $3,619,458 | $3,619,323 | | Annual Amount | $7,629,749,008 | 0.20% | $15,259,498 | $7,000,138 | $6,999,862 | | | | Max Payout | $14,000,000 | | | | Michael J. Murray — Co-Chief Operating Officer | | | | | | | | | Maximum Bonus Percentage | Total Bonus Earned | Portion of Bonus Paid | | | Semi-Annual Period | PTI | | | Cash | Stock | | 1st Semi-Annual Period Ended March 31, 2022 | $3,380,609,289 | 0.10% | $3,380,609 | $3,380,609 | — | | 2nd Semi-Annual Period Ended September 30, 2022 | $4,249,139,719 | 0.10% | $4,249,140 | $4,249,140 | — | | Annual Amount | $7,629,749,008 | 0.10% | $7,629,749 | $7,629,749 | — | | | | Max Payout | $10,000,000 | | | | Paul J. Romanowski — Co-Chief Operating Officer | | | | | | | | | Maximum Bonus Percentage | Total Bonus Earned | Portion of Bonus Paid | | | Semi-Annual Period | PTI | | | Cash | Stock | | 1st Semi-Annual Period Ended March 31, 2022 | $3,380,609,289 | 0.10% | $3,380,609 | $3,380,609 | — | | 2nd Semi-Annual Period Ended September 30, 2022 | $4,249,139,719 | 0.10% | $4,249,140 | $4,249,140 | — | | Annual Amount | $7,629,749,008 | 0.10% | $7,629,749 | $7,629,749 | — | | | | Max Payout | $10,000,000 | | |

  42. 2022 Fiscal Year – Pre-Tax Income Performance Bonus Results and Payout

    For fiscal 2022, the total PTI Bonus payable to Mr. Horton and Mr. Auld was limited to $14 million, with the payout earned equally split between cash and Company stock (PTI Bonus Stock), and the equity portion of the award being subject to a 2-year holding period. The number of shares issued was determined by dividing the portion of the PTI Stock Bonus by the Company’s stock price on the date the Compensation Committee approved the award payout. Amounts attributable to any fractional shares for the equity component were paid in cash. During the 2-year holding period, Mr. Horton and Mr. Auld are permitted to make transfers of stock for estate planning purposes as long as the shares of stock stay within their respective family’s beneficial ownership. The Compensation Committee believes the holding period further motivates the executives to deliver strong long-term stock performance, which we believe aligns them with the goals of our stockholders. For fiscal 2022, the total PTI Bonus payable to Mr. Murray and Mr. Romanowski was limited to $10 million.

  43. 2022 Fiscal Year – Performance Bonus

    2022 Fiscal Year – Performance Bonus Chief Financial Officer – Mr. Wheat. During fiscal 2022, the Board of Directors and our Compensation Committee approved performance bonuses for Mr. Wheat on a semi-annual basis. For the first semi-annual period ended March 31, 2022, Mr. Wheat received a $1,000,000 bonus, and for the second semi-annual period ended September 30, 2022, he received a $2,000,000 bonus, for a total bonus of $3,000,000 in fiscal 2022. In determining Mr. Wheat’s bonus, the Compensation Committee considered the Company’s financial and operating performance in fiscal 2022 and Mr. Wheat’s contribution and performance in his areas of responsibility across our operations. The Compensation Committee considered the review and recommendations of the Chairman and CEO in determining the amount of Mr. Wheat’s performance bonus.

  44. Equity Compensation: Performance and Time-Based

    Equity Compensation: Performance and Time-Based Our Compensation Committee believes that our executive compensation plans should include performance and time-based equity awards as the primary long-term components. We believe long-term equity awards align the financial interests of our executive officers with the interests of our stockholders by focusing more on the long-term performance of the Company, with value realized by executives being aligned with stockholder value. Performance Equity. We grant our executive officers equity awards in the form of performance restricted stock units, which are earned by achieving four key performance goals over a three-year performance period. The primary purpose of these awards is to motivate our executives to achieve a superior level of performance for each of these performance metrics relative to our peer group which we believe will drive long-term value to our stockholders. Recent Action. Based on feedback from our stockholders, the Compensation Committee increased the performance required for vesting under the ROI, SG&A and GP portions of the performance equity plan by increasing the relative performance ranking required for vesting at the threshold and target levels. The performance equity awards granted in fiscal 2022 require a 6th rank out of 10 for vesting at threshold (from 9th rank in previous year incentives) and a 3rd rank out of 10 for vesting at target (from 5th rank in previous year incentives). Time-Based Equity. We grant our executive officers equity awards in the form of restricted stock units that vest over a three- or five-year time period based on continued employment with the Company. The primary purpose of these awards is to align the interests of our executives with those of long-term stockholders as well as to retain the services of our executive officers who have significant experience and have demonstrated superior performance in the homebuilding industry. The Compensation Committee took the following actions regarding Performance RSUs and Time-Based RSUs in fiscal 2022:

  45. Equity Compensation: Performance and Time-Based

    | • | Performance RSUs determination. Each fiscal year, the Compensation Committee reviews the number and value of performance restricted stock units (Performance RSUs) to be awarded for a new three-year performance period. The Compensation Committee reviews the target number of Performance RSUs, the maximum number of Performance RSUs that could be earned and the expected value of such awards. The Compensation Committee also considers all other components of each executive’s compensation. In fiscal 2022, in line with its commitment to strengthening long-term alignment of interests with stockholders and the portion of overall target compensation that is equity based, the Compensation Committee increased the number of Performance RSUs granted to its executive officers compared to fiscal 2021. In fiscal 2022, Mr. Horton and Mr. Auld each received 150,000 target Performance RSUs with a grant date value of $12,087,000, Mr. Murray and Mr. Romanowski each received 50,000 target Performance RSUs with a grant date value of $4,029,000 and Mr. Wheat received 30,000 target Performance RSUs with a grant date value of $2,417,400. |

  46. Equity Compensation: Performance and Time-Based

    | • | Time-Based RSUs determination. In fiscal 2022, the Compensation Committee reviewed the number and value of time-based restricted stock units (Time-Based RSUs) to be awarded to its executives. In fiscal 2022, Mr. Horton and Mr. Auld each received 38,197 Time-Based RSUs with a grant date value of $2,900,298, Mr. Murray and Mr. Romanowski each received 19,098 Time-Based RSUs with a grant date value of $1,418,599 and Mr. Wheat received 12,675 Time-Based RSUs with a grant date fair value of $946,189. These equity awards vest ratably for Mr. Horton and Mr. Auld over three years and for Mr. Murray, Mr. Romanowski and Mr. Wheat vest ratably over five years. In determining the number of Time-Based RSUs to grant each year to our executives, the Compensation Committee takes into consideration the grant date value of these awards together with the grant value of the Performance RSUs. |

  47. 2022 Fiscal Year – Award of 2024 Performance Restricted Stock Units – Potential Vesting at September 30, 2024

    2022 Fiscal Year – Award of 2024 Performance Restricted Stock Units – Potential Vesting at September 30, 2024 Under our long-term incentive program, each of our named executive officers has the opportunity to earn incentive awards based on performance over a three-year period. 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 fiscal 2022, the Compensation Committee awarded a target number of performance restricted stock units (the “2024 Performance RSUs”) to each of the named executive officers as follows:

  48. 2022 Fiscal Year – Award of 2024 Performance Restricted Stock Units – Potential Vesting at September 30, 2024

    | Name | Target Number of 2024 Performance RSUs | | Donald R. Horton | 150,000 | | David V. Auld | 150,000 | | Michael J. Murray | 50,000 | | Paul J. Romanowski | 50,000 | | Bill W. Wheat | 30,000 |

  49. 2022 Fiscal Year – Award of 2024 Performance Restricted Stock Units – Potential Vesting at September 30, 2024

    The 2024 Performance RSUs are similar to prior year performance RSUs except for enhancements made to increase the rigor of the threshold and target performance requirements for the ROI, SG&A and GP portions of the awards. Based on feedback from our stockholders, for the 2024 Performance RSUs, the Compensation Committee increased the performance metrics to require a 6th rank out of 10 for vesting at threshold (from 9th rank in previous year incentives) and a 3rd rank out of 10 for vesting at target (from 5th rank in previous year incentives). The 2024 Performance RSUs include four performance goals of relative TSR, relative ROI, relative SG&A and relative GP, and 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, 2021 through September 30, 2024 (the “2024 Performance Period”). The four performance goals and weightings for each award are the same as those set forth on page 39. and are discussed in the tables and discussion on pages 39 through 40. Likewise, the Company’s peer group for the 2024 Performance RSUs consists of the publicly-traded homebuilding companies listed on page 42. The Compensation Committee used 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 incentivizes our executives to achieve a return for 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 continue to reflect important internal operating metrics. ROI incentivizes 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 incentivizes our executives to control selling, general and administrative expenses. GP incentivizes our executives to maximize our profits on our homes by appropriately managing sales prices and incentives and controlling the cost of land, labor, materials and products used in building our homes. In fiscal 2022, when determining the target number of 2024 Performance RSUs to award, the Compensation Committee reviewed the estimated annual compensation expense for these awards in relation to the Company’s consolidated revenue, pre-tax income and other operating results. The Compensation Committee chose to further incentivize these executive officers by retaining the maximum payout at two times the target amounts in the event that maximum performance is achieved on the four Performance Goals. When the 2024 Performance RSUs were granted, the target and maximum amounts were subjective determinations and not based on any formulaic method or benchmark. Additional information on the grant date fair value of the 2024 Performance RSUs is set forth in the “Summary Compensation Table” on page 44 and the “Grants of Plan-Based Awards” table on page 45.

  50. 2022 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2022

    2022 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2022 Chairman, Chief Executive Officer, Co-Chief Operating Officers and Chief Financial Officer. In October 2022, the Compensation Committee reviewed the performance achieved for the Performance RSUs granted in November 2019 (the “2022 Performance RSUs”) to each of our then serving named executive officers. The 2022 Performance RSUs had a three-year performance period of October 1, 2019 through September 30, 2022 (the “2022 Performance Period”). The 2022 Performance RSUs vested based on achieving performance under the four performance goals (Performance Goals) in the table below. The number of shares earned and paid are set forth in the table under the heading “2022 Performance RSUs Final Results” on page 40.

  51. 2022 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2022

    | 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% |

  52. 2022 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2022

    | TSR: | means “total shareholder return” (stock price increases and decreases plus dividends) of the Company over the 2022 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. | | ROI: | means “return on investment” which is consolidated pre-tax income or loss divided by average total assets over the 2022 Performance Period. | | SG&A: | means consolidated “selling, general and administrative expense” (including corporate general and administrative expenses) as a percentage of consolidated revenues over the 2022 Performance Period. | | GP: | means homebuilding segment “gross profit” defined as homebuilding revenues minus homebuilding cost of sales, including inventory and land option charges, divided by homebuilding revenues over the 2022 Performance Period. |

  53. 2022 Performance Restricted Stock Units – Ranking Results and Vesting at September 30, 2022

    The following tables set forth the number of Performance RSUs that would be earned based on the final performance rankings of the Company.

  54. (each weighted 25% of target award)

    | Performance Level Compared to 10-Company Peer Group | Percentage of Target Award | | Donald R. Horton | David V. Auld | Michael J. Murray and Bill W. Wheat | | | | | Number of Performance RSUs Earned | | | | 10(th) Rank | Forfeited | | Zero | Zero | Zero | | 9(th) Rank | Threshold | 10% | 5,000 | 2,500 | 750 | | 5(th) Rank | Target | 100% | 50,000 | 25,000 | 7,500 | | 1(st) Rank | Maximum | 200% | 100,000 | 50,000 | 15,000 |

  55. (each weighted 25% of target award)

    As set forth in the tables above, the number of 2022 Performance RSUs could have been earned at a maximum of 400,000 for Mr. Horton, 200,000 for Mr. Auld, 60,000 for Mr. Murray and 60,000 for Mr. Wheat upon maximum achievement of each of the four Performance Goals and forfeited by each executive in the event of below threshold performance of each of the four Performance Goals. For the 2022 Performance RSUs, the Company’s peer group consisted 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 Homes. Each 2022 Performance RSU represented the contingent right to receive one share of common stock if vesting was satisfied. The 2022 Performance RSUs had no rights to dividends or voting prior to vesting and payout in common stock. Vesting of the 2022 Performance RSUs with respect to the TSR Performance Goal was determined after the 2022 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 2022 Performance RSUs with respect to the ROI, SG&A and GP Performance Goals was determined after the 2022 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 any portion of the 2022 Performance RSUs with respect to the TSR goal was to perform better than nine percentage points below the S&P 500 Index. The hurdle or threshold for earning or vesting in any portion of the 2022 Performance RSUs with respect to the ROI, SG&A and GP Performance Goals was to rank ninth place or better. The following tables set forth the final relative rankings for the TSR, ROI, SG&A and GP performance goals with respect to the 2022 Performance RSUs:

  56. 2022 Performance RSUs

    2022 Performance RSUs

  57. Final Results

    | | Donald R. Horton | | David V. Auld | | Michael J. Murray and Bill W. Wheat | | | Final Company Performance Rankings | 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 = 5+ Points Above | 50,000 Units | 75,000 Units | 25,000 Units | 37,500 Units | 7,500 Units | 11,250 Units | | ROI = 2(nd) Place | 50,000 Units | 87,500 Units | 25,000 Units | 43,750 Units | 7,500 Units | 13,125 Units | | SG&A = 2(nd) Place | 50,000 Units | 87,500 Units | 25,000 Units | 43,750 Units | 7,500 Units | 13,125 Units | | GP = 3(rd) Place | 50,000 Units | 75,000 Units | 25,000 Units | 37,500 Units | 7,500 Units | 11,250 Units | | | 200,000 Units | 325,000 Units | 100,000 Units | 162,500 Units | 30,000 Units | 48,750 Units |

  58. Retirement Benefits

    Retirement Benefits Our executive officers do not participate in any qualified defined benefit plans, but they do participate in the retirement plans described 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. 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 2022, the maximum amount that could be contributed was $20,500 ($27,000 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 for each applicable year are included in the “All Other Compensation” column in the “Summary Compensation Table” on page 44. Deferred Compensation Plan. The Company also maintains the Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan is a nonqualified deferred compensation plan maintained primarily to provide deferred compensation benefits in excess of IRS contribution limits for a select group of “management or highly compensated employees”. The Deferred Compensation Plan was adopted and approved by the Compensation Committee and ratified by the Board of Directors. SERP 2. The Company also maintains the Supplemental Executive Retirement Plan 2 (SERP 2), a nonqualified plan, 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. In fiscal 2022, 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. 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. For fiscal 2022, the amount for our Chairman was $483,758 and the amount for our CEO was $230,414. We believe the amounts accrued for above-market earnings on SERP 2 balances are reasonable when compared to our peer group and reasonable relative to the total compensation packages offered to our named executive officers. Also, we considered other factors, including that 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 serves as a useful and reasonable fixed compensation component of our overall compensation package.

  59. Use of Compensation Peer Group Data

    Use of Compensation Peer Group Data As discussed above under “Review of Compensation”, the Compensation Committee engaged Meridian Compensation Partners to provide a comprehensive review of our executive compensation program as compared to the Peer Group described below and to provide general insight on other Fortune 500 companies’ compensation practices (focusing on companies with similar revenue and market capitalization to us). Although the Compensation Committee believes it important and will continue to consider general market compensation practices for companies of a similar size, at this time and primarily due to the extremely competitive nature of the home building industry, the Compensation Committee believes using the below described Peer Group as its primary compensation peer group is the best comparison set. Our Board of Directors and Compensation Committee believe providing a competitive pay program is important and a key factor to developing and retaining our leadership team and a fundamental reason for the success and performance of our company. The Compensation Committee utilizes compensation data from our Peer Group of publicly-traded homebuilding companies to analyze compensation decisions. However, the Compensation Committee does not attempt to position compensation at any specified level or ranking within our Peer Group. In fiscal 2022, the peer group compensation data was compiled by the Compensation Committee Chair and the Company’s Corporate Counsel and Secretary using information contained 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 Compensation Committee considers factors such as market capitalization, competition in our markets and mergers, acquisitions and consolidations when determining our peer group. Our Peer Group for fiscal 2022 remained unchanged from fiscal 2021 and consisted of the following publicly-traded homebuilding companies that had market capitalizations ranging from approximately $1.5 billion to $21.1 billion at September 30, 2022. Our market capitalization on that date was $23.2 billion.

  60. Use of Compensation Peer Group Data

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

  61. Compensation Risk Analysis

    | Base Salary: | We set fixed base salaries in amounts that we believe are commensurate with the level of experience, responsibility and tenure of the applicable executive. We believe that providing an appropriate base salary mitigates inappropriate risk-taking by providing a fixed and certain level of semi-monthly income. | | Annual Bonus Plan: | With respect to our Chairman, CEO and Co-COOs, we provide an annual incentive bonus opportunity based on the Company’s pre-tax income. Our CFO is awarded an annual discretionary bonus based on his individual performance and the performance of the Company. The final amount of these annual awards is subject to the discretion of the Compensation Committee. Their discretion can be used to reduce the payout when the Committee believes levels achieved result in an inappropriate level of annual pay when balanced with the total compensation package and taking into consideration the Company’s and the executive’s performance. We believe we mitigate risk related to the annual performance goals through our approval process with respect to the final payout of these awards. | | Long-Term Equity: | With respect to our Chairman, CEO, Co-COOs and CFO, we grant a combination of equity awards in the form of performance restricted stock units and time-based restricted stock units to incentivize performance related to the Company’s key operational and financial goals over a period longer than one fiscal year. We believe the long-term nature of these performance awards mitigates risk because the level of performance achieved is analyzed over a number of fiscal years (typically three), thereby allowing us to take into account any short-term or one-time events that may not be sustainable over a longer time period. | | Restricted Stock Units: | We use restricted stock units as a component of long-term compensation to incentivize performance and to serve as a retention tool. We believe restricted stock units that vest over time are a valuable tool in promoting employee retention. We do not grant restricted stock units in coordination with the release of material non-public information. Further, we have several levels of review when restricted stock units are granted, including approval by the Compensation Committee and review by corporate legal, human resources and accounting personnel to ensure the terms of the restricted stock units approved match the terms of the restricted stock units issued. | | Performance Goals: | The Compensation Committee has selected operating and financial performance goals to incentivize performance. The performance goals tied to the annual and long-term awards are the achievement of consolidated pre-tax income, relative return on investment, relative gross profit, relative selling, general and administrative expense and relative total stockholder return. The Company has established appropriate controls around the determination of the components that define these goals and the calculations of the ultimate payouts of these awards. | | Discretion and Clawback: | We mitigate compensation risk by giving the Compensation Committee sole discretion to reduce the final payout on a portion of the total compensation awarded. The Compensation Committee maintains sole discretion to reduce the final payout of the PTI Bonus. The Compensation Committee does not have the discretion to reduce awarded compensation related to time-based equity awards and performance-based equity awards, except in a clawback situation. Our executive officers are subject to the clawback provisions of the Sarbanes-Oxley Act and any other applicable federally enacted legislation related to a clawback of executive compensation. In addition, in fiscal 2022, in response to stockholder feedback, the Compensation Committee adopted a clawback policy that applies to both cash and equity incentives, with the clawback trigger based on either a financial restatement or other material harm to the Company. | | Pledging/Hedging Company Securities: | Our directors and executive officers are prohibited from pledging or hedging transactions or engaging in other transactions designed to hedge or offset any decrease in the market value of our securities. |

  62. Summary Compensation Table

    Summary Compensation Table

  63. Summary Compensation Table

    | Name and Principal Position | Year | Salary | Bonus(1) | Stock Awards(2) | Non-Equity Incentive Plan Compensation(3) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings(4) | All Other Compensation(5) | Total | | Donald R. Horton Executive Chairman | 2022 | $1,000,000 | — | $21,987,160 | $7,000,138 | $483,758 | $112,636 | $30,583,692 | | | 2021 | $1,000,000 | — | $16,834,391 | $32,138,153 | $469,139 | $112,186 | $50,553,869 | | | 2020 | $1,000,000 | — | $13,150,697 | $17,897,631 | $376,156 | $112,036 | $32,536,520 | | David V. Auld President and Chief Executive Officer | 2022 | $700,000 | — | $21,987,160 | $7,000,138 | $230,414 | $79,150 | $29,996,862 | | | 2021 | $700,000 | — | $8,145,841 | $21,425,435 | $221,620 | $78,700 | $30,571,596 | | | 2020 | $700,000 | — | $6,311,004 | $11,931,754 | $176,014 | $78,550 | $19,197,322 | | Michael J. Murray Executive Vice President and Co-Chief Operating Officer | 2022 | $500,000 | — | $5,447,599 | $7,629,749 | $92,368 | $59,150 | $13,728,866 | | | 2021 | $500,000 | — | $3,044,615 | $8,034,538 | $87,047 | $58,700 | $11,724,900 | | | 2020 | $500,000 | — | $2,461,329 | $4,474,408 | $67,472 | $58,550 | $7,561,759 | | Paul J. Romanowski Executive Vice President and Co-Chief Operating Officer | 2022 | $500,000 | — | $5,447,599 | $7,629,749 | $110,780 | $59,150 | $13,747,278 | | | 2021 | — | — | — | — | — | — | — | | | 2020 | — | — | — | — | — | — | — | | Bill W. Wheat Executive Vice President and Chief Financial Officer | 2022 | $500,000 | $3,000,000 | $3,363,589 | — | $133,972 | $59,150 | $7,056,711 | | | 2021 | $500,000 | $3,000,000 | $3,044,615 | — | $128,098 | $58,700 | $6,731,413 | | | 2020 | $500,000 | $2,000,000 | $2,461,329 | — | $101,033 | $58,550 | $5,120,912 |

  64. Summary Compensation Table

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

  65. Summary Compensation Table

    | For fiscal 2022, the amounts include the grant date fair value of both the time-vesting RSUs and the target number of 2024 Performance RSUs granted in fiscal 2022. For Mr. Horton and Mr. Auld the amounts also include the portion of their PTI Bonus paid in stock in fiscal 2022. Additional information on the PTI Bonus is discussed under the heading “2022 Fiscal Year — PTI Bonus Results and Payout” on page 36. The grant date fair value is determined in accordance with accounting guidance for share-based payments. If the maximum number of 2024 Performance RSUs was used rather than the target number, the total grant date fair value of the awards would be $24,174,000 for each of Mr. Horton and Mr. Auld, $8,058,000 for each of Mr. Murray and Mr. Romanowski, and $4,834,800 for Mr. Wheat. Additional information regarding the 2024 Performance RSUs and the time-vesting RSUs are set forth in footnotes 2 and 3 to the “Grants of Plan-Based Awards” table on page 45. Additional information regarding the assumptions underlying these calculations is available in Note K to the Company’s consolidated financial statements filed with the Company’s Form 10-K for the fiscal year ended September 30, 2022.(2) |

  66. Summary Compensation Table

    | For fiscal 2021, the amounts include the grant date fair value of both the time-vesting RSUs and the target number of 2023 Performance RSUs granted in fiscal 2021. The grant date fair value is determined in accordance with accounting guidance for share-based payments. If the maximum number of 2023 Performance RSUs was used rather than the target number, the total grant date fair value of the awards would be $23,658,697 for Mr. Horton, $11,565,004 for Mr. Auld and $4,037,529 for each of Mr. Murray and Mr. Wheat. |

  67. Summary Compensation Table

    | For fiscal 2020, the amounts include the grant date fair value of both the time-vesting RSUs of and the target number of 2022 Performance RSUs granted in fiscal 2020. The grant date fair value is determined in accordance with accounting guidance for share-based payments. If the maximum number of 2022 Performance RSUs was used rather than the target number, the total grant date fair value of the awards would be $18,020,392 for Mr. Horton, $8,718,502 for Mr. Auld and $3,262,426 for each of Mr. Murray and Mr. Wheat. |

  68. Summary Compensation Table

    | Amounts reflect the performance bonuses earned under the Company’s PTI Bonus.(3) |

  69. Summary Compensation Table

    | Mr. Horton. For fiscal 2022, the Compensation Committee limited the amount of the PTI Bonus that could be paid to $14 million, 50% of which to be paid in cash and 50% paid in stock. Therefore, $7 million was paid in cash and $7 million was paid in common stock, which is subject to a two year holding period. Additional information on the PTI Bonus is discussed under the heading “2022 Fiscal Year — PTI Bonus Results and Payout” on page 36. |

  70. Summary Compensation Table

    | Mr. Auld. For fiscal 2022, the Compensation Committee limited the amount of the PTI Bonus that could be paid to $14 million, 50% of which to be paid in cash and 50% paid in stock. Therefore, $7 million was paid in cash and $7 million was paid in common stock, which is subject to a two year holding period. Additional information on the PTI Bonus is discussed under the heading “2022 Fiscal Year — PTI Bonus Results and Payout” on page 36. |

  71. Summary Compensation Table

    | Additional information on the annual incentive bonus is discussed under the heading “2022 Fiscal Year — PTI Bonus Results and Payout” on page 36. For fiscal 2022, the portion of the PTI Bonus otherwise payable in stock for Mr. Horton and Mr. Auld, but for which a full share could not be purchased was paid in cash and is reported in this column. |

  72. Summary Compensation Table

    | Amounts reflect 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 41.(4) |

  73. Summary Compensation Table

    | For fiscal 2022, the amounts under “All Other Compensation” include the following components:(5) |

  74. Summary Compensation Table

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

  75. Summary Compensation Table

    | Matching contributions of $9,150 to the respective accounts of Mr. Horton, Mr. Auld, Mr. Murray, Mr. Romanowski and Mr. Wheat under the D.R. Horton 401(k) plan.(b) |

  76. Summary Compensation Table

    | The participant’s portion of group health plan premiums of $3,486 paid by the Company for the benefit of Mr. Horton.(c) |

  77. Grants of Plan-Based Awards in Fiscal 2022

    Grants of Plan-Based Awards in Fiscal 2022

  78. Grants of Plan-Based Awards in Fiscal 2022

    | | | | | | | | | All Other Stock Awards: Number of Securities Underlying Stock Awards (3) | Grant Date Fair Value of Stock and Option Awards ($)(2)(3) | | Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | | | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | Donald R. Horton | 3/23/2022 | — | — | $7,000,000 | — | — | — | — | — | | | 3/23/2022 | — | — | — | — | — | 93,668 | — | $6,999,862 | | | 3/23/2022 | — | — | — | 60,000 | 150,000 | 300,000 | — | $12,087,000 | | | 3/23/2022 | — | — | — | — | — | — | 38,197 | $2,900,298 | | David V. Auld | 3/23/2022 | — | — | $7,000,000 | — | — | — | — | — | | | 3/23/2022 | — | — | — | — | — | 93,668 | — | $6,999,862 | | | 3/23/2022 | — | — | — | 60,000 | 150,000 | 300,000 | — | $12,087,000 | | | 3/23/2022 | — | — | — | — | — | — | 38,197 | $2,900,298 | | Michael J. Murray | 3/23/2022 | — | — | $10,000,000 | — | — | — | — | — | | | 3/23/2022 | — | — | — | 20,000 | 50,000 | 100,000 | — | $4,029,000 | | | 3/23/2022 | — | — | — | — | — | — | 19,098 | $1,418,599 | | Paul J. Romanowski | 3/23/2022 | — | — | $10,000,000 | — | — | — | — | — | | | 3/23/2022 | — | — | — | 20,000 | 50,000 | 100,000 | — | $4,029,000 | | | 3/23/2022 | — | — | — | — | — | — | 19,098 | $1,418,599 | | Bill W. Wheat | 3/23/2022 | — | — | — | 12,000 | 30,000 | 60,000 | — | $2,417,400 | | | 3/30/2022 | — | — | — | — | — | — | 12,675 | $946,189 |

  79. Grants of Plan-Based Awards in Fiscal 2022

    | Represents the maximum value of the cash portion of the performance bonuses paid under the PTI Bonus program approved on October 27, 2021, as amended and restated on March 23, 2022. Additional information related to the award is discussed under the heading “2022 Fiscal Year – PTI Bonus Results and Payout” on page 36. The actual earned payouts under the PTI Bonus program are reflected in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table” on page 44.(1) |

  80. Grants of Plan-Based Awards in Fiscal 2022

    | The 93,668 shares for each of Mr. Horton and Mr. Auld represent the portion of their performance bonuses paid under the PTI Bonus program in stock. Such shares were issued on April 19, 2022 (45,609 shares each) and on October 26, 2022 (48,059 shares each). Additional information related to the award is discussed under the heading “2022 Fiscal Year – PTI Bonus Results and Payout” on page 36.(2) |

  81. Grants of Plan-Based Awards in Fiscal 2022

    | Mr. Horton, Mr. Auld, Mr. Murray, Mr. Romanowski and Mr. Wheat were awarded a target amount of 2024 Performance RSUs on October 27, 2021, as amended and restated on March 23 2022. The threshold, target and maximum amounts reflect the number of 2024 Performance RSUs each executive could earn based on the level of performance attained on four performance goals ranked against our peer group or the S&P 500 Index, as applicable, at the end of the three-year performance period. |

  82. Grants of Plan-Based Awards in Fiscal 2022

    | The grant date fair value of the 2024 Performance RSUs is $80.58 per unit and was determined in accordance with accounting guidance for share-based payments. These 2024 Performance RSUs are discussed under the heading “2022 Fiscal Year – Award of 2024 Performance Restricted Stock Units – Potential Vesting at September 30, 2024” on page 37 and the related grant date fair value is reflected in the “Stock Awards” column in the “Summary Compensation Table” on page 44. |

  83. Grants of Plan-Based Awards in Fiscal 2022

    | On March 23, 2022, Mr. Horton, Mr. Auld, Mr. Murray and Mr. Romanowski were awarded 38,197, 38,197, 19,098 and 19,098 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. Romanowski vest annually in five equal installments on each anniversary of the grant date.(3) |

  84. Grants of Plan-Based Awards in Fiscal 2022

    | The grant date fair value of the March 23, 2022 RSUs vesting in three years is $75.93 per unit and $74.28 per unit for the RSUs vesting in five years. The grant date fair values were determined in accordance with accounting guidance for share-based payments. The values of $2,900,298 for each Mr. Horton and Mr. Auld and $1,418,599 for each of Mr. Murray and Mr. Romanowski are included in the “Stock Awards” column in the “Summary Compensation Table” on page 44. |

  85. Grants of Plan-Based Awards in Fiscal 2022

    | On March 30, 2022, Mr. Wheat was awarded 12,675 time-vested RSUs. The RSUs for Mr. Wheat vest annually in five equal installments on each anniversary of the grant date. |

  86. Grants of Plan-Based Awards in Fiscal 2022

    | The grant date fair value of the March 30, 2022 RSUs vesting in five years is $74.65 per unit. The grant date fair values were determined in accordance with accounting guidance for share-based payments. The value of $946,189 for Mr. Wheat are included in the “Stock Awards” column in the “Summary Compensation Table” on page 44. |

  87. 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, 2022.

  88. Outstanding Equity Awards at Fiscal Year-End

    | | Option Awards | | | | Stock Awards | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable | 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 | 3/23/2022 | — | — | — | 38,197(2) | — | $2,572,568(2) | | | 3/23/2022 | — | — | — | — | 300,000(3) | $20,205,000(3) | | | 3/17/2021 | — | — | — | 20,193(2) | — | $1,359,999(2) | | | 11/3/2020 | — | — | — | — | 400,000(4) | $26,940,000(4) | | | 3/12/2020 | — | — | — | 21,063(2) | — | $1,418,593(2) | | David V. Auld | 3/23/2022 | — | — | — | 38,197(2) | — | $2,572,568(2) | | | 3/23/2022 | — | — | — | — | 300,000(3) | $20,205,000(3) | | | 3/17/2021 | — | — | — | 8,078(2) | — | $544,053(2) | | | 11/3/2020 | — | — | — | — | 200,000(4) | $13,470,000(4) | | | 3/12/2020 | — | — | — | 8,779(2) | — | $591,266(2) | | Michael J. Murray(1) | 3/23/2022 | — | — | — | 19,098(2) | — | $1,286,250(2) | | | 3/23/2022 | — | — | — | — | 100,000(3) | $6,735,000(3) | | | 3/17/2021 | — | — | — | 8,928(2) | — | $601,301(2) | | | 11/3/2020 | — | — | — | — | 60,000(4) | $4,041,000(4) | | | 3/12/2020 | — | — | — | 14,847(2) | — | $999,945(2) | | | 11/26/2018 | — | — | — | 11,860(2) | — | $798,771(2) | | | 3/7/2018 | — | — | — | 4,600(2) | — | $309,810(2) | | | 3/6/2014 | 60,000 | $23.86 | 3/6/2024 | — | — | — | | Paul J. Romanowski(1) | 3/23/2022 | — | — | — | 19,098(2) | — | $1,286,250(2) | | | 3/23/2022 | — | — | — | — | 100,000(3) | $6,735,000(3) | | | 3/17/2021 | — | — | — | 6,936(2) | — | $467,140(2) | | | 3/12/2020 | — | — | — | 11,538(2) | — | $777,084(2) | | | 11/26/2018 | — | — | — | 8,000(2) | — | $538,800(2) | | | 3/7/2018 | — | — | — | 4,000(2) | — | $269,400(2) | | | 3/6/2014 | 40,000 | $23.86 | 3/6/2024 | — | — | — | | | 3/5/2013 | 30,000 | $23.80 | 3/5/2023 | — | — | — | | Bill W. Wheat(1) | 3/30/2022 | — | — | — | 12,675(2) | — | $853,661(2) | | | 3/23/2022 | — | — | — | — | 60,000(3) | $4,041,000(3) | | | 3/17/2021 | — | — | — | 8,928(2) | — | $601,301(2) | | | 11/3/2020 | — | — | — | — | 60,000(4) | $4,041,000(4) | | | 3/12/2020 | — | — | — | 14,847(2) | — | $999,945(2) | | | 11/26/2018 | — | — | — | 11,860(2) | — | $798,771(2) | | | 3/7/2018 | — | — | — | 4,600(2) | — | $309,810(2) | | | 3/6/2014 | 60,000 | $23.86 | 3/6/2024 | — | — | — |

  89. Outstanding Equity Awards at Fiscal Year-End

    | All stock options vested annually in five equal installments from the grant date and have a ten-year term.(1) |

  90. Outstanding Equity Awards at Fiscal Year-End

    | Represents the time-vesting RSUs granted to our named executive officers. The value of the time-vesting RSUs is based on the closing price of our common stock on September 30, 2022 of $67.35. Mr. Horton’s and Mr. Auld’s awards vest in three equal annual installments on each of the first three anniversaries of the grant date. Mr. Murray, Mr. Romanowski and Mr. Wheat’s awards vest in five equal annual installments on each of the first five anniversaries of the grant date.(2) |

  91. Outstanding Equity Awards at Fiscal Year-End

    | Represents the potential maximum number of 2024 Performance RSUs that may be earned. The target number of 2024 Performance RSUs is 150,000 for each Mr. Horton and Mr. Auld, 50,000 for each Mr. Murray and Mr. Romanowski and 30,000 for Mr. Wheat. These 2024 Performance RSUs are described under “2022 Fiscal Year — Award of 2024 Performance Restricted Stock Units — Potential Vesting at September 30, 2024” on page 37, and vest subject to attainment of applicable performance criteria following completion of a three-year performance period on September 30, 2024. The value of the 2024 Performance RSUs is based on the closing price of our common stock on September 30, 2022 of $67.35.(3) |

  92. Outstanding Equity Awards at Fiscal Year-End

    | Represents the potential maximum number of 2023 Performance RSUs awarded. The target number of 2023 Performance RSUs is 200,000 for Mr. Horton, 100,000 for Mr. Auld and 30,000 for each Mr. Murray and Mr. Wheat. These 2023 Performance RSUs vest subject to attainment of applicable performance criteria following completion of a three-year performance period on September 30, 2023. The value of the 2023 Performance RSUs is based on the closing price of our common stock on September 30, 2022 of $67.35.(4) |

  93. 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, 2022.

  94. 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 (2) | Value Realized on Vesting (3) | | Donald R. Horton | — | — | 504,322 | $43,119,509 | | David V. Auld | 60,000 | $5,114,142 | 294,902 | $24,713,766 | | Michael J. Murray | 40,000 | $3,374,041 | 76,141 | $6,640,193 | | Paul J. Romanowski | — | — | 18,660 | $1,592,387 | | Bill W. Wheat | 60,000 | $5,097,211 | 76,141 | $6,640,193 |

  95. Option Exercises and Stock Vested

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

  96. Option Exercises and Stock Vested

    | Number of shares under Stock Awards includes vesting of time-vesting RSUs for each person, Performance RSUs for each person except Mr. Romanowski and for Mr. Horton and Mr. Auld includes the portion of their PTI Bonus paid in stock.(2) |

  97. Option Exercises and Stock Vested

    | Value reflects the closing stock price on the applicable vesting date multiplied by the number of shares vested.(3) |

  98. 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 cash bonuses or director fee compensation and up to 90% of base salary. 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. Pursuant to 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. 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. 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 Deferred Compensation Plan was adopted and approved by the Compensation Committee and ratified by the Board of Directors. SERP 2. Under the Company’s SERP 2 plan, the Company credits an amount to each participant’s account each 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 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 2022 and outstanding balances as of September 30, 2022 under both of our nonqualified deferred compensation plans.

  99. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation

  100. Nonqualified Deferred Compensation

    | | Contributions in Fiscal 2022 | | Aggregate Earnings (Losses) in Fiscal 2022 | | | Aggregate Balance at September 30, 2022 | | | Name | Executive Contributions to Deferred Cash Compensation | Company Contributions to SERP 2 (1) | Deferred Cash Compensation (2) | SERP 2 (3) | Aggregate Withdrawals/ Distributions in Fiscal 2022 | Deferred Cash Compensation | SERP 2 | | Donald R. Horton | — | $100,000 | $(1,468,608) | $605,416 | — | $10,706,013 | $6,537,217 | | David V. Auld | — | $70,000 | — | $288,360 | — | — | $3,136,044 | | Michael J. Murray | — | $50,000 | $(28,017) | $115,598 | — | $74,928 | $1,279,116 | | Paul J. Romanowski | — | $50,000 | $(1,733,438) | $138,640 | — | $19,170,551 | $1,524,123 | | Bill W. Wheat | — | $50,000 | — | $167,664 | — | — | $1,832,725 |

  101. Nonqualified Deferred Compensation

    | Represents the amount of unfunded, unsecured liabilities credited by the Company on behalf of each participant in fiscal 2022 under the SERP 2. Such amount is also included in the “All Other Compensation” column of the “Summary Compensation Table” on page 44.(1) |

  102. Nonqualified Deferred Compensation

    | Represents the net amount of (losses) earnings resulting from the performance of a variety of independently managed funds available to and selected by each participant under the Deferred Compensation Plan.(2) |

  103. Nonqualified Deferred Compensation

    | Represents the amount of earnings related to the SERP 2. The rate is determined by the SERP 2 plan administrative committee and is typically 10% per annum. The portion of earnings considered above-market are included in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the “Summary Compensation Table” on page 44. The above-market portion of earnings for each of the above individuals for fiscal 2022 was: Mr. Horton: $483,758; Mr. Auld: $230,414; Mr. Murray: $92,368; Mr. Romanowski $110,780; and Mr. Wheat: $133,972.(3) |

  104. 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 a 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 (except that 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); or (iv) During any two-year period, a majority of the members of the Board is replaced by members of the Board who are not nominated and approved by the Board.

  105. 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, unless the Compensation Committee determined to award additional severance amounts. The amounts in the table assume a termination date of September 30, 2022, the last day of our fiscal year, and, if applicable, are based on the closing price of our common stock of $67.35 on September 30, 2022. Because Mr. Horton and Mr. Auld had reached the normal retirement age (65 years old) before September 30, 2022, we included amounts payable upon retirement only for them. 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 and reported in prior years and deferred, at the executive officer’s option, under our Deferred Compensation Plan. The balances of such accounts as of September 30, 2022 are set forth and explained in the “Nonqualified Deferred Compensation” table on page 48. The table reflects compensation that would have been paid based on the listed events if such events had occurred on September 30, 2022.

  106. Potential Payments Upon Termination or Change in Control

    Potential Payments Upon Termination or Change in Control

  107. Potential Payments Upon Termination or Change in Control

    | | | Termination of Employment | | | | | | | Name | Payments and Benefits | Voluntary ($) | Normal Retirement ($)(5) | Without Cause ($) | With Cause ($) | Death or Disability ($) | Change in Control ($) | | Donald R. Horton | PTI Bonus:(1) | | | | | | | | | Cash and Stock | 7,238,781 | 7,238,781 | 7,238,781 | — | 7,238,781 | 7,238,781 | | | 2023 Performance RSUs(2) | 8,979,978 | 8,979,978 | 8,979,978 | — | 8,979,978 | 8,979,978 | | | 2024 Performance RSUs(3) | 3,367,500 | 3,367,500 | 3,367,500 | — | 3,367,500 | 3,367,500 | | | Vesting of Equity Awards: Time-Vesting Restricted Stock Units(4) | — | 5,351,160 | — | — | 5,351,160 | — | | | Payments of SERP 2 Contributions | 6,537,217 | 6,537,217 | 6,537,217 | — | 6,537,217 | 6,537,217 | | | Total | 26,123,476 | 31,474,636 | 26,123,476 | — | 31,474,636 | 26,123,476 | | David V. Auld | PTI Bonus:(1) | | | | | | | | | Cash and Stock | 7,238,781 | 7,238,781 | 7,238,781 | — | 7,238,781 | 7,238,781 | | | 2023 Performance RSUs(2) | 4,490,022 | 4,490,022 | 4,490,022 | — | 4,490,022 | 4,490,022 | | | 2024 Performance RSUs(3) | 3,367,500 | 3,367,500 | 3,367,500 | — | 3,367,500 | 3,367,500 | | | Vesting of Equity Awards: Time-Vesting Restricted Stock Units(4) | — | 3,707,887 | — | — | 3,707,887 | — | | | Payments of SERP 2 Contributions | 3,136,044 | 3,136,044 | 3,136,044 | — | 3,136,044 | 3,136,044 | | | Total | 18,232,347 | 21,940,234 | 18,232,347 | — | 21,940,234 | 18,232,347 | | Michael J. Murray | PTI Bonus:(1) | | | | | | | | | Cash | 4,249,140 | — | 4,249,140 | — | 4,249,140 | 4,249,140 | | | 2023 Performance RSUs(2) | 1,347,000 | — | 1,347,000 | — | 1,347,000 | 1,347,000 | | | 2024 Performance RSUs(3) | 1,122,522 | — | 1,122,522 | — | 1,122,522 | 1,122,522 | | | Vesting of Equity Awards: Time-Vesting Restricted Stock Units(4) | — | — | — | — | 3,996,078 | 1,108,581 | | | Payments of SERP 2 Contributions | 1,279,116 | — | 1,279,116 | — | 1,279,116 | 1,279,116 | | | Total | 7,997,778 | — | 7,997,778 | — | 11,993,856 | 9,106,359 | | Paul J. Romanowski | PTI Bonus:(1) | | | | | | | | | Cash | 4,249,140 | — | 4,249,140 | — | 4,249,140 | 4,249,140 | | | 2024 Performance RSUs(3) | 1,122,522 | — | 1,122,522 | — | 1,122,522 | 1,122,522 | | | Vesting of Equity Awards: Time-Vesting Restricted Stock Units(4) | — | — | — | — | 3,338,674 | 808,200 | | | Payments of SERP 2 Contributions | 1,524,123 | — | 1,524,123 | — | 1,524,123 | 1,524,123 | | | Total | 6,895,785 | — | 6,895,785 | — | 10,234,459 | 7,703,985 | | Bill W. Wheat | 2023 Performance RSUs(2) | 1,347,000 | — | 1,347,000 | — | 1,347,000 | 1,347,000 | | | 2024 Performance RSUs(3) | 673,500 | — | 673,500 | — | 673,500 | 673,500 | | | Vesting of Equity Awards: Time-Vesting Restricted Stock Units(4) | — | — | — | — | 3,563,489 | 1,108,581 | | | Payments of SERP 2 Contributions | 1,832,725 | — | 1,832,725 | — | 1,832,725 | 1,832,725 | | | Total | 3,853,225 | — | 3,853,225 | — | 7,416,714 | 4,961,806 |

  108. Potential Payments Upon Termination or Change in Control

    | This amount represents the portion of the PTI Bonus earned for the six months ended September 30, 2022, and is included in the “Non-Equity Incentive Plan Compensation” and “Stock Awards” columns in the “Summary Compensation Table” on page 44. These amounts have been earned and paid as discussed on page 36.(1) |

  109. Potential Payments Upon Termination or Change in Control

    | Mr. Horton, Mr. Auld, Mr. Murray and Mr. Wheat were awarded a target number of 200,000, 100,000, 30,000 and 30,000 2023 Performance RSUs, respectively, for the performance period of October 1, 2020 through September 30, 2023. Pro-rata vesting may occur based on the number of months served from October 1, 2020 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 2023 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 2023 Performance RSUs. With respect to an event of voluntary termination, normal retirement, without cause termination, death, disability or a change in control, the 2023 Performance RSUs are valued at $67.35 per unit, the closing price of our stock on September 30, 2022. 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, 2022.(2) |

  110. Potential Payments Upon Termination or Change in Control

    | Mr. Horton, Mr. Auld, Mr. Murray, Mr. Romanowski and Mr. Wheat were awarded a target number of 150,000, 150,000, 50,000, 50,000 and 30,000 2024 Performance RSUs, respectively, for the performance period of October 1, 2021 through September 30, 2024. Pro-rata vesting may occur based on the number of months served from October 1, 2021 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 2024 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 2024 Performance RSUs. With respect to an event of voluntary termination, normal retirement, without cause termination, death, disability or a change in control, the 2024 Performance RSUs are valued at $67.35 per unit, the closing price of our stock on September 30, 2022. 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, 2022. The 2024 Performance RSUs are discussed in more detail under the heading “2022 Fiscal Year – Award of 2024 Performance Restricted Stock Units – Potential Vesting at September 30, 2024” on page 37.(3) |

  111. Potential Payments Upon Termination or Change in Control

    | For Mr. Horton, Mr. Auld, Mr. Murray, Mr. Romanowski and Mr. Wheat, 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 46, valued at $67.35 per unit, the closing price of our stock on September 30, 2022. 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, 2022. Accelerated vesting in a Change of Control does not apply to time-vesting RSUs granted in March 2021 and March 2020 due to a double-trigger provision requirement for all time-vesting awards in or after fiscal 2020. Additional information on the time-vesting RSUs granted in fiscal 2022 is set forth in footnote 3 to the “Grants of Plan-Based Awards” table on page 45.(4) |

  112. Potential Payments Upon Termination or Change in Control

    | Because Mr. Horton and Mr. Auld had reached the normal retirement age (65 years old) under our applicable plans on September 30, 2022, we included amounts under the “Normal Retirement” column only for them.(5) |

  113. Potential Payments Upon Termination or Change in Control

    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:

  114. Potential Payments Upon Termination or Change in Control

    | • | We used September 30, 2022 as the date to determine the median employee. At that date, we had approximately 13,130 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. |

  115. Potential Payments Upon Termination or Change in Control

    | • | To identify the median employee from our employee population, we obtained a listing of total compensation paid to each employee during fiscal 2022. 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 paid during the fiscal year. 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. As we had an even number of employees, the methodology resulted in the identification of two median employees. We selected the employee whom we believed had annual total compensation that was more representative of our general compensation practices. |

  116. Potential Payments Upon Termination or Change in Control

    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 44. 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, 2022:

  117. Potential Payments Upon Termination or Change in Control

    | • | The total compensation of our median employee was $116,088. |

  118. Potential Payments Upon Termination or Change in Control

    | • | The total compensation of our CEO was $30,017,979. |

  119. Potential Payments Upon Termination or Change in Control

    Accordingly, for fiscal 2022, the ratio of the total compensation of Mr. Auld, our CEO, to the total compensation of the median compensation of all employees (excluding Mr. Auld), was 259 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. Ernst & Young LLP has been engaged by the Audit Committee to serve through our fiscal year ending September 30, 2023. A representative of Ernst & Young LLP will be present in person or by conference call at the 2023 Annual Meeting and will have an opportunity to make a statement and to respond to appropriate questions from stockholders.