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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Check the appropriate box: |
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o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
o Definitive Proxy Statement | |
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o Soliciting Material Pursuant to §240.14a-12 |
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Timothy R. Eller | Centex Corporation | |
Chairman & | 2728 N. Harwood | |
Chief Executive Officer | Dallas, Texas 75201 |
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completing and returning a proxy by mail, or by using the telephone or the
Internet. Please refer to the proxy card or other voting instructions
included with these proxy materials for information on the voting methods
available to you. If you vote by telephone or on the Internet, you do not
need to return your proxy card. Please see “Who Can Vote” on page 1 and
“How You Can Vote” on page 2 of the accompanying proxy statement for more
information.
ownership of Centex common stock, as well as photo identification, for
admittance to the annual meeting. For registered stockholders, the top
portion of the proxy card is the annual meeting admission ticket.
Stockholders who hold shares through an intermediary will be admitted to
the annual meeting by showing evidence of their stock ownership as of the
record date. If you are attending on behalf of an entity that is a stockholder,
you should bring evidence of your employment or association with that
entity. Please see “How You Can Attend the Meeting” on page 2 of the
accompanying proxy statement for more information.
elect to receive an e-mail with a link to future proxy materials and our
annual report on the Internet. Please see “Electronic Delivery of Proxy
Materials and Annual Report” on page 4 of the accompanying proxy
statement for more information.
address, you may elect to receive only one copy of the proxy materials and
our annual report. Please see “Single Household Mailings” on page 5 of the
accompanying proxy statement for more information.
fees and significantly reduce the environmental impact of our annual
meeting.
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2728 N. Harwood
Dallas, Texas 75201
TIME AND DATE | 9:00 a.m., Central Daylight Time, on Thursday, July 10, 2008. | |
PLACE | 2728 N. Harwood, 10th Floor, Dallas, Texas 75201. | |
ITEMS OF BUSINESS | • To elect as members of the Board of Directors the three nominees named in the accompanying proxy statement, each for a term of three years ending at the Annual Meeting of Stockholders in 2011. | |
• To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the 2009 fiscal year. | ||
• To approve our amended and restated articles of incorporation. | ||
• To approve the material terms of the performance goals under our 2003 Annual Incentive Compensation Plan and 2003 Equity Incentive Plan. | ||
• To approve amendments to our 2003 Equity Incentive Plan, including to increase the number of shares available for award. | ||
• To vote on two stockholder proposals, if presented at the meeting. | ||
• To transact such other business as may properly come before the meeting and any adjournments or postponements. | ||
RECORD DATE | You can vote if you are a stockholder of record at the close of business on May 19, 2008. | |
ANNUAL REPORT | Our 2008 Annual Report to Stockholders is enclosed with these materials as a separate booklet. | |
PROXY VOTING | It is important that your shares be represented and voted at the meeting. You can vote your shares by completing and returning your proxy card or voting instruction card. Most stockholders also have the option of voting their shares on the Internet or by telephone by following the voting instructions printed on your proxy card or included with your proxy materials. You can revoke a proxy before its exercise at the meeting by following the instructions in the accompanying proxy statement. |
June __, 2008 | ||
James R. Peacock III | ||
Vice President, | ||
Deputy General Counsel and Secretary |
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Appendix B | ||||
Appendix C | ||||
Appendix D | ||||
n To be voted on at the annual meeting |
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VOTING INFORMATION
At the meeting, stockholders will vote on: | ||
(1) | Election of the three nominees named in Proposal No. 1 on page 16 as directors, comprising a class of directors to serve until the 2011 annual meeting of stockholders; | |
(2) | Ratification of the appointment of Ernst & Young LLP, which we refer to as Ernst & Young, as our independent registered public accounting firm for the 2009 fiscal year; | |
(3) | Approval of our amended and restated articles of incorporation; | |
(4) | Approval of the material terms of the performance goals under the Centex Corporation 2003 Annual Incentive Compensation Plan, which we refer to as the Annual Plan; | |
(5) | Approval of the material terms of the performance goals under the Centex Corporation 2003 Equity Incentive Plan, which we refer to as the 2003 Equity Plan; | |
(6) | Approval of amendments to our 2003 Equity Plan to increase the number of authorized shares and establish new rules for the counting of shares utilized under the plan; |
(7) | A stockholder proposal regarding climate change, if presented at the meeting; | |
(8) | A stockholder proposal regarding declassification of the board, if presented at the meeting; and | |
(9) | Any other business properly brought before the meeting. |
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• | FOR the election of the three nominees for director named on page 16, | |
• | FOR the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for the 2009 fiscal year, | |
• | FOR the approval of the amended and restated articles of incorporation, | |
• | FOR the approval of the material terms of the performance goals under our Annual Plan and 2003 Equity Plan, | |
• | FOR the amendments to our 2003 Equity Plan, and | |
• | AGAINST the two proposals submitted by stockholders. |
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• | the election of directors, | |
• | the ratification of the appointment of Ernst & Young as our independent registered public accounting firm, and |
• | the approval of the material terms of the performance goals under our Annual Plan and 2003 Equity Plan, |
• | the approval of the amended and restated articles of incorporation, | |
• | the approval of amendments to our 2003 Equity Plan, and | |
• | the stockholder proposals, |
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• | ratification of the appointment of Ernst & Young as our independent registered public accounting firm, | |
• | the approval of the material terms of the performance goals under our Annual Plan and 2003 Equity Plan, and | |
• | the two stockholder proposals. |
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• | Stockholders of Record.If your shares are registered in your own name, you may consent to electronic delivery when voting for this meeting on the Internet atwww.proxyvote.com. | |
• | Beneficial Holders.If your shares are not registered in your name, check the information provided to you by your bank or broker, or contact your bank or broker for information on electronic delivery service. | |
• | Plan Participants.If you are a participant in one or more of our employee benefit plans, you may consent to electronic delivery when voting for this meeting on the Internet atwww.proxyvote.com. |
• | Stockholders of Record.If your shares are registered in your own name and you are interested in consenting to the delivery of a single proxy statement or annual report or a notice of Internet availability of such documents, you may contact Investor Relations by mail at P.O. Box 199000, Dallas, Texas 75219-9000, or by telephone at 214-981-5000. | |
• | Beneficial Holders.If your shares are not registered in your own name, your broker, bank, trust or other nominee that holds your shares may have asked you to consent to the delivery of a single proxy statement or annual report if there are other Centex stockholders who share an address with you. If you currently receive more than one proxy statement or annual report at your household, and would like to receive only one copy of each in the future or a notice of Internet availability of such documents, you should contact your nominee. | |
• | Right to Request Separate Copies.If you consent to the delivery of a single proxy statement and annual report or a notice of Internet availability of such documents but later decide that you would prefer to receive a separate copy of the documents or notice, as applicable, for each stockholder sharing your address, then please notify us or your nominee, as applicable, and we or they will promptly deliver such documents or notice. If you wish to receive a separate copy of the proxy statement or annual report or a notice of Internet availability of such documents for each stockholder sharing your address in the future, you may also contact Investor Relations by mail at P.O. Box 199000, Dallas, Texas 75219-9000, or by telephone at 214-981-5000. |
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the Availability of Proxy Materials for
the Annual Meeting of Stockholders
to be held on July 10, 2008.
the 2008 Annual Report
are available atwww.proxyvote.com.
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CORPORATE GOVERNANCE INFORMATION
Name | Audit | Compensation | Governance | Executive | ||||||||||||
Barbara T. AlexanderÀ | £ | |||||||||||||||
Juan L. ElekÀ | = | |||||||||||||||
Timothy R. Eller | £ | |||||||||||||||
Ursula O. Fairbairn | £ | |||||||||||||||
Thomas J. FalkwÀ | = | |||||||||||||||
Clint W. Murchison, III | = | |||||||||||||||
Frederic M. PosesÀ | = | |||||||||||||||
James J. PostlÀ | £ | |||||||||||||||
David W. QuinnÀ | = | = | ||||||||||||||
Matthew K. RoseÀ | = | |||||||||||||||
Thomas M. SchoeweÀ | = | |||||||||||||||
w = Lead Director À = Audit Committee Financial Expert = = Committee Member £ = Committee Chair | ||||||||||||||||
Number of Meetings during fiscal 2008 | 8 | 6 | 5 | 3 |
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• | selection, appointment, compensation, evaluation, retention and oversight of the work of any independent auditors engaged to prepare or issue an audit report or related work or perform other audit, review or attest services for us, including pre-approval of all audit engagement fees and all non-audit services; | |
• | establishment of procedures for (1) the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters and (2) the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; | |
• | discussion of our annual audited and quarterly financial statements and other significant financial disclosures (including press releases and financial information and earnings guidance provided to analysts and rating agencies) with management and our independent auditors; | |
• | discussion of policies with respect to risk assessment and risk management; | |
• | preparation of the report required to be included in our annual proxy statement regarding review of financial statements and auditor independence (the report for fiscal 2008 is included under “Audit Committee Report” on page 22); and | |
• | review and reassessment at least annually of the adequacy of the committee’s charter and recommendation of appropriate changes to the board. |
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• | review of our compensation philosophy and the corporate goals and objectives relevant to compensation, including whether the compensation programs are reasonably related to corporate performance and are achieving their intended purpose; | |
• | administration of the compensation plans that we adopt, including stock plans, a supplemental executive retirement plan and short-term and long-term incentive compensation plans for members of our senior management and senior management of our principal subsidiaries, and grant of all awards under our equity-based compensation plans; | |
• | review of succession planning for our senior management and that of our principal subsidiaries; |
• | approval, review and oversight of our benefit plans; | |
• | preparation of the report required to be included in our annual proxy statement regarding review of compensation disclosures (the report for fiscal 2008 is included under “Compensation and Management Development Committee Report” on page 59); | |
• | oversight of the performance and compensation of our chief executive officer and the other members of senior management; and | |
• | review and reassessment at least annually of the adequacy of the committee’s charter and recommendation of appropriate changes to the board. |
• | identification and evaluation of individuals qualified to become members of the board, |
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including recommendation of annual director nominees and nominees to fill any board vacancies, and determination of the independence of directors; | ||
• | oversight of the annual process of the evaluation of the board, board committees and individual directors; | |
• | development and recommendation to the board of appropriate governance guidelines and review of all proposed amendments to our articles of incorporation and by-laws; | |
• | oversight of our positions and policies with respect to significant stockholder relations issues, including proposals submitted by stockholders; |
• | review and oversight of director compensation and director and officer stock ownership guidelines; and | |
• | review and reassessment at least annually of the adequacy of the committee’s charter and recommendation of appropriate changes to the board. |
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(1) | the name and address of the stockholder who intends to make the nomination and of the person to be nominated; | |
(2) | a representation that the stockholder is a record holder of Centex common stock entitled to vote at the annual meeting of |
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stockholders and intends to appear in person or by proxy at the meeting to nominate the person specified; | ||
(3) | a description of all arrangements or understandings between the stockholder and the nominee and other named persons pursuant to which the nomination is to be made; | |
(4) | any other information regarding the nominee proposed by the stockholder that would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had the nominee been nominated by the board; and | |
(5) | the consent of the nominee to serve as a Centex director if so elected. |
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PROPOSALS TO BE VOTED ON AT THE 2008 ANNUAL MEETING
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Barbara T. Alexander Independent Consultant Age 59 Director since July 1999 | From October 1999 until January 2004, Ms. Alexander served as a senior advisor of UBS Securities and its predecessors, which we refer to as UBS. Before that time, beginning in January 1992, she served as a managing director of UBS, where she managed the Construction and Furnishings Group (North America) in the corporate finance department. Prior to joining UBS, Ms. Alexander was a managing director in the corporate finance department of Salomon Brothers. Ms. Alexander is an executive fellow and past chairman of the board of the Joint Center for Housing Studies at Harvard University and is currently a member of that board’s executive committee. Ms. Alexander also serves as a director of Federal Home Loan Mortgage Corporation (Freddie Mac) and QUALCOMM Incorporated. | |||
Timothy R. Eller Chairman of the Board, Chief Executive Officer, President, and Chief Operating Officer Age 59 Director since July 2002 | Mr. Eller joined Centex Homes in 1973 and held various operational positions in the Illinois and Minnesota divisions. He became vice president of the Minnesota division in 1977 and the division’s president in 1981. He was named an executive vice president of Centex Real Estate Corporation, the managing partner of Centex Homes, in 1985 and elected as that company’s president and chief operating officer in January 1990. In July 1991, he was named president and chief executive officer and assumed the position of chairman of Centex Real Estate Corporation in April 1998, serving through April 2003, and beginning again in April 2006. In August 1998, Mr. Eller also was named executive vice president of Centex Corporation, serving until April 2002 when he became our president and chief operating officer. He assumed the additional roles of our chairman and chief executive officer in April 2004. | |||
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James J. Postl Retired as President and Chief Executive Officer of Pennzoil-Quaker State Company Age 62 Director since July 2004 | Mr. Postl retired as president and chief executive officer of Pennzoil-Quaker State Company following its acquisition by Shell Products U.S. in October 2002. He joined Pennzoil in October 1998, prior to the formation of Pennzoil-Quaker State Company in December 1998, when he was named president and chief operating officer and was elected to the board of directors of the new company. In May 2000, he was named president and chief executive officer. Prior to joining Pennzoil-Quaker, he served as president of Nabisco Biscuit Company from 1996 and was president and chief executive officer of Nabisco International from 1994 to 1996. Prior to joining Nabisco, he held a variety of management positions with PepsiCo, Inc. over a 19-year period. Mr. Postl serves as a director of Cooper Industries, Ltd., American Balanced Fund, Inc. and Northwest Airlines Corporation. He also serves on the boards of a number of non-profit and academic institutions. | |||
Juan L. Elek Founder and Co-Chairman of Elek, Moreno Valle y Asociados Age 64 Director since February 1995 | Mr. Elek is founder and co-chairman of the Mexican investment-banking firm of Elek, Moreno Valle y Asociados, where he has served since 1984. From 1978 through 1984, Mr. Elek held various positions with Banamex Financial Group, including adjoining managing director and head of international banking. Mr. Elek is currently a member of the board of trustees of Southern Methodist University. | |||
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Ursula O. Fairbairn President and Chief Executive Officer of Fairbairn Group LLC Age 65 Director since July 2005 | Ms. Fairbairn is president and chief executive officer of Fairbairn Group LLC (a human resources and executive management consulting company), a position she has held since April 2005. She served as executive vice president, human resources and quality of American Express Company (a diversified global travel and financial services company), a position she held from December 1996 until her retirement in April 2005. Ms. Fairbairn also serves as a director of Air Products and Chemicals, Inc., Sunoco, Inc., V.F. Corporation and Circuit City Stores, Inc. (through June 2008). | |||
Thomas J. Falk Chairman of the Board and Chief Executive Officer of Kimberly-Clark Corporation Age 50 Director since May 2003 | Mr. Falk is chairman of the board and chief executive officer of Kimberly-Clark Corporation, having been elected chairman in 2003 and chief executive officer in 2002. Mr. Falk served as president of Kimberly-Clark from 1999 until his election as chairman in 2003, and served as chief operating officer of that company from 1999 until his election as chief executive officer in 2002. Mr. Falk previously had been elected group president-global tissue, pulp and paper of Kimberly-Clark in 1998, where he was responsible for Kimberly-Clark’s global tissue businesses. Earlier in his career, Mr. Falk had responsibility for Kimberly-Clark’s North American infant care, child care and wet wipes businesses. Mr. Falk joined Kimberly-Clark in 1983 and has held other senior management positions in that company. Mr. Falk also serves on the boards of directors of the University of Wisconsin Foundation and the Grocery Manufacturers of America, and as a governor of the Boys & Girls Clubs of America. | |||
Matthew K. Rose Chairman, President and Chief Executive Officer of Burlington Northern Santa Fe Corporation Age 49 Director since July 2006 | Mr. Rose is chairman, president and chief executive officer of Burlington Northern Santa Fe Corporation, positions he has held since March 2002. Previously, Mr. Rose held the following positions at Burlington Northern or its predecessors: president and chief executive officer (December 2000 to March 2002); president and chief operating officer (June 1999 to December 2000); and senior vice president and chief operations officer (August 1997 to June 1999). Mr. Rose also serves as a director of AMR Corporation. | |||
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Thomas M. Schoewe Executive Vice President and Chief Financial Officer of Wal-Mart Stores, Inc. Age 55 Director since October 2001 | Mr. Schoewe is the executive vice president and chief financial officer of Wal-Mart Stores, Inc., where he has served since January 2000. Prior to joining Wal-Mart Stores, Mr. Schoewe spent 14 years at Black and Decker Corp., most recently as senior vice president and chief financial officer. Previously, he had a 12-year career with Beatrice Companies, where he was chief financial officer and controller of Beatrice Consumer Durables, Inc. A native of the Chicago area, Mr. Schoewe earned a BBA degree in finance from Loyola University of Chicago. He is a member of Financial Executives International and a national trustee of The First Tee. | |||
Clint W. Murchison, III Private Investments Age 61 Director since February 1979 | Mr. Murchison is chairman of Tecon Corporation, which is engaged in private real estate development and other investment activities, and is also chairman of Bankers Trust Company of Texas, a private trust company. He had held these positions for more than five years. He is chairman of the investment committee of RPM Metropolitan Fund, which invests in private partnerships across a broad range of asset classes. Mr. Murchison is a trustee of the Boys & Girls Clubs of America. | |||
Frederic M. Poses Chairman and Chief Executive Officer of Trane Inc. Age 65 Director since July 2001 | Mr. Poses has been chairman and chief executive officer of Trane Inc. (formerly American Standard Companies Inc.) since January 2000 and has served as a director of that company since October 1999. Before that time, beginning in 1998, he was president and chief operating officer of Allied Signal, Inc., where he had spent his entire 30-year business career, starting as a financial analyst in 1969 and serving in various other capacities, including president of the Engineered Materials business beginning in 1988. He was a director of Allied Signal, Inc. from 1997 until October 1999. Mr. Poses also serves as a director of Raytheon Company and Tyco Electronics Ltd. | |||
David W. Quinn Retired as Vice Chairman of Centex Age 66 Director since July 1989 | Mr. Quinn retired as vice chairman of our board and an employee of Centex on March 31, 2002. Mr. Quinn was elected vice chairman of the board in May 1996 and was our chief financial officer from February 1987 until June 1997 and from October 1997 through May 2000. Mr. Quinn served as executive vice president of Centex from February 1987 until his election as vice chairman of the board. Mr. Quinn is also a director of Eagle Materials Inc. | |||
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Fiscal 2008 | Fiscal 2007 | |||||||
Type of Fees | ($ in thousands) | ($ in thousands) | ||||||
Audit Fees | 3,530 | 3,326 | ||||||
Audit-Related Fees | 64 | 76 | ||||||
Tax Fees | 8 | 3 | ||||||
All Other Fees | — | — | ||||||
Total | 3,602 | 3,405 |
• | “Audit Fees” are fees for professional services rendered by Ernst & Young for the audit of our financial statements included in our Form 10-K report and the review of our financial statements included in our Form 10-Q reports or services that are normally provided by Ernst & Young in connection with statutory or regulatory filings or engagements. | |
• | “Audit-Related Fees” are fees for assurance and related services by Ernst & Young that are reasonably related to the performance of the audit or review of the financial statements, including audits of employee benefit plans, accounting consultations, procedures performed related to securitizations and other debt transactions, and services provided in connection with the disposition of operations. | |
• | “Tax Fees” means fees for professional services rendered by Ernst & Young for tax compliance, tax advice and tax planning. | |
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• | “All Other Fees” includes all other fees for products and services provided by Ernst & Young. |
• | reviewed and discussed with management and Ernst & Young Centex’s audited consolidated financial statements for the year ended March 31, 2008; management’s assessment of the effectiveness of Centex’s internal control over financial reporting; and Ernst & Young’s evaluation of Centex’s internal control over financial reporting; | |
• | discussed with Ernst & Young the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (Communication with Audit Committees); and |
• | received and reviewed the written disclosures and the letter required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and discussed with Ernst & Young its independence, and concluded that Ernst & Young is independent from Centex and its management. |
Clint W. Murchison, III
Thomas J. Schoewe
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Subject Matter of Change | Previous Restated Articles of Incorporation | Restated Articles | ||
1. Authorized Shares | The number of authorized shares set forth in the 1993 restatement was increased twice pursuant to action that was taken by stockholders in February 1998 and February 2004 | The effect of these two previously approved amendments is reflected in Article Fourth of the Restated Articles | ||
Purpose: To incorporate prior amendments and articles of correction | ||||
Effect: None | ||||
2. Address of principal office; name and address of registered office and agent | Article Second lists Centex’s principal office address in Nevada and the name and address of our registered agent. This information is provided to the Secretary of State through other means and is not required in restated articles. | Provision is deleted | ||
Purpose: To remove an outdated principal office address and the name and address of the registered office and agent, which are unnecessary provisions. | ||||
Effect: None | ||||
3. Members of the first board of directors | Article Fifth, Second paragraph lists the names and addresses of the first board of directors of Centex | Provision is deleted | ||
Purpose: To remove an unnecessary provision | ||||
Effect: None | ||||
4. Incorporators of Centex | Article Sixth lists the names and addresses of each of the incorporators of Centex | Provision is deleted | ||
Purpose: To remove an unnecessary provision | ||||
Effect: None | ||||
5. Limitation of director and officer liability and indemnification | Article Tenth sets forth a limitation on the liability of directors or officers of Centex and provides for indemnification of directors, officers and other representatives of Centex | Provision is deleted | ||
Purpose: To remove outdated provisions that are potentially in conflict with Nevada law and Centex’s by-laws | ||||
Effect: The limitation of director and officer liability and indemnification will be governed by the provisions of Nevada law and Centex’s by-laws without reference to the outdated provisions |
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Subject Matter of Change | Previous Version of Annual Plan | Proposed Change to Annual Plan | ||
1. Performance goals | Includes a variety of specified performance goals. | Add business process metrics (e.g., asset turns, cycle time, and one or more elements of efficiency or cost or expense) as an additional set of performance goals to the plan. | ||
2. Maximum award limit | The maximum award that may be paid currently to any participant for a fiscal year is an amount equal to 2% of the reported consolidated net income of Centex and its subsidiaries for such fiscal year. | The maximum award that may be paid to any participant for a fiscal year is an amount equal to $15 million. |
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Subject Matter of Change | Previous Version of 2003 Equity Plan | Proposed Change to 2003 Equity Plan | ||
1. Performance goals | Includes a variety of specified performance goals. | Add business process metrics (e.g., asset turns, cycle time, and one or more elements of efficiency or cost or expense)as an additional set of performance goals to the plan. | ||
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Subject Matter of Change | Previous Version of 2003 Equity Plan | Proposed Change to 2003 Equity Plan | ||
2. Maximum award limit | The maximum award that may be paid currently to any participant for a fiscal year is an amount equal to 2% of the reported consolidated net income of Centex and its subsidiaries for such fiscal year, plus the Black-Scholes value of options to purchase 219,977 shares of common stock. | The maximum award that may be paid to any participant for a fiscal year is an amount equal to $15 million, plus the Black-Scholes value of options to purchase 219,977 shares of common stock. |
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• | increase the total number of shares that may be issued under the 2003 Equity Plan by 3,500,000 shares, so that the total number of shares currently available for grant will equal approximately 4,834,470; | ||
• | increase the total number of shares that may be issued under the 2003 Equity Plan as stock awards by eliminating the former sublimit of the total number of shares that may be issued applicable to stock awards and substituting a provision that each share issued under the 2003 Equity Plan as a stock option will reduce the number of available shares under the 2003 Equity Plan by 1.0 shares, and as a stock-settled award will reduce the number of available shares by 1.4 shares; and | ||
• | require that after the effective date of the Amendments no shares used to pay the exercise price of an option, or taxes due upon the exercise of an option (including a net exercise), and no shares surrendered or used to pay taxes upon the vesting or distribution of a stock award, may be added back to the shares available for award under the 2003 Equity Plan. |
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Fiscal 2008 Awards — 2003 Equity Plan | ||||||||||||||||
Restricted | Long-Term | |||||||||||||||
Stock and | Perfor- | |||||||||||||||
Aggregate | Stock | Restricted | mance | |||||||||||||
Dollar | Options | Stock Units | Units | |||||||||||||
Name | Value ($) | (#) | (#) | (#) | ||||||||||||
Timothy R. Eller, Chief Executive Officer | 1,999,961 | — | — | 42,444 | ||||||||||||
Catherine R. Smith, Chief Financial Officer | 3,324,962 | — | 84,864 | 20,161 | ||||||||||||
David L. Barclay, President, Western Region of Centex Homes | 1,714,931 | — | 8,236 | 31,833 | ||||||||||||
Robert S. Stewart, Senior Vice President — Strategy, Marketing, Sales and Corporate Development | 799,944 | — | 5,490 | 11,672 | ||||||||||||
Brian J. Woram, Senior Vice President and Chief Legal Officer | 1,174,941 | — | 8,236 | 16,977 | ||||||||||||
All Executive Officers as a Group | 11,505,099 | 19,922 | 156,265 | 138,472 | ||||||||||||
All Non-Employee Directors as a Group | 2,000,218 | 68,220 | 25,950 | — | ||||||||||||
All Non-Executive Officer Employees as a Group | 19,103,288 | 333,365 | 70,195 | 288,325 |
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• | Stock options covering more than 1,110,995 shares of Centex common stock; | ||
• | Stock awards covering more than 555,497 shares of Centex common stock; or |
• | Employee awards consisting of cash (including awards that are granted as performance awards) totaling more than $15 million plus an amount equal to the Black-Scholes value of 219,977 shares of Centex common stock (determined as of the date of grant). |
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• | Ensuring increased director experience, both individually and in the aggregate; | |
• | Allowing for increased director independence for the benefit of our stockholders; |
• | Enhancing the board’s ability to adopt and maintain a long-term focus, including through prioritization of long-term business oversight and planning over the management of short-term objectives; and | |
• | Attracting director candidates who are interested in making a long-term commitment to Centex through an orderly transition to the board. |
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OTHER IMPORTANT INFORMATION
Amount and Nature of Beneficial Ownership (#) (1) | ||||||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||
Beneficially | ||||||||||||||||||||||||||
Owned, | ||||||||||||||||||||||||||
Excluding | ||||||||||||||||||||||||||
Options, | Stock Options | Restricted | ||||||||||||||||||||||||
Restricted | Exercisable | Stock Units | Total | |||||||||||||||||||||||
Stock and | Within | Vested Within | Common Stock | |||||||||||||||||||||||
Restricted | 60 Days of | Restricted | 60 Days of | Beneficially | Percent | |||||||||||||||||||||
Name | Position | Stock Units (2) | Record Date (3) | Stock (4) | Record Date (5) | Owned (6) | of Class | |||||||||||||||||||
Barbara T. Alexander | Director | 38,090 | 51,177 | 6,006 | 0 | 95,273 | * | |||||||||||||||||||
David L. Barclay | President, Western | 27,426 | 295,186 | 0 | 11,179 | 333,791 | * | |||||||||||||||||||
Region, of Centex Homes (7) | ||||||||||||||||||||||||||
Juan L. Elek | Director | 3,000 | 28,501 | 8,006 | 0 | 39,507 | * | |||||||||||||||||||
Timothy R. Eller | Chairman of the | 743,736 | 1,931,600 | 13,008 | 0 | 2,688,344 | 2.1 | % | ||||||||||||||||||
Board, Chief | ||||||||||||||||||||||||||
Executive Officer and Director (8) | ||||||||||||||||||||||||||
Ursula O. Fairbairn | Director | 1,000 | 11,798 | 6,006 | 0 | 18,804 | * | |||||||||||||||||||
Thomas J. Falk | Director | 7,000 | 18,098 | 6,006 | 0 | 31,104 | * | |||||||||||||||||||
Clint W. Murchison, III | Director | 144,540 | 109,420 | 6,006 | 0 | 259,966 | * | |||||||||||||||||||
Frederic M. Poses | Director | 3,000 | 28,421 | 8,006 | 0 | 39,427 | * | |||||||||||||||||||
James J. Postl | Director | 1,500 | 16,058 | 6,006 | 0 | 23,564 | * | |||||||||||||||||||
David W. Quinn | Director | 258,879 | 98,659 | 6,006 | 0 | 363,544 | * | |||||||||||||||||||
Matthew K. Rose | Director | 0 | 6,822 | 4,690 | 0 | 11,512 | * | |||||||||||||||||||
Thomas M. Schoewe | Director | 13,127 | 24,001 | 6,006 | 0 | 43,134 | * | |||||||||||||||||||
Catherine R. Smith | Executive Vice | 3,643 | 11,743 | 104,682 | 0 | 120,068 | * | |||||||||||||||||||
President and Chief | ||||||||||||||||||||||||||
Financial Officer | ||||||||||||||||||||||||||
Robert S. Stewart | Senior Vice | 59,780 | 299,498 | 7,321 | 0 | 366,599 | * | |||||||||||||||||||
President — Strategy, | ||||||||||||||||||||||||||
Marketing, Sales and | ||||||||||||||||||||||||||
Corporate Development | ||||||||||||||||||||||||||
Brian J. Woram | Senior Vice | 43,475 | 201,961 | 10,067 | 0 | 255,503 | * | |||||||||||||||||||
President and Chief Legal Officer | ||||||||||||||||||||||||||
All directors, nominees and executive officers as a group (17 persons) | 1,352,187 | 3,254,360 | 241,444 | 11,179 | 4,859,170 | 3.8 | % |
* | Less than 1% | |
(1) | For purposes of this table, “beneficial ownership” is determined in accordance with Rule 13d-3 of the SEC under the Securities Exchange Act of 1934, pursuant to which a person is deemed to have “beneficial ownership” of shares of Centex common stock for which that person has or shares the power to vote or dispose of those shares, or has the right to acquire within 60 days. For purposes of computing the percentage of outstanding shares of Centex common stock held by each person or group of persons named in the table, any shares as to which that person or persons have the right to acquire within 60 days are deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person or persons. |
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(2) | The amounts shown in this column include the following shares of Centex common stock: (a) shares held for the accounts of these individuals in the Centex Corporation Common Stock Fund under the Saving for Retirement Plan, as follows: Mr. Barclay — 3,174 shares; Mr. Eller — 12,653 shares; and Mr. Woram — 187 shares; and all directors and executive officers as a group — 16,014 shares; and (b) shares held by a family limited partnership in which these individuals have or share voting or investment power, as follows: Mr. Eller — 164,800 shares (which shares are pledged as collateral for a loan to such family limited partnership); Mr. Falk — 7,000 shares; Mr. Murchison — 128,948 shares; and all directors and executive officers as a group — 300,748 shares. | |
(3) | The amounts shown in this column consist of shares of Centex common stock that may be acquired by these individuals pursuant to the exercise of stock options granted to them under our 1987 Stock Option Plan, 1998 Employee Non-Qualified Stock Option Plan, 2001 Stock Plan or 2003 Equity Plan and exercisable on May 19, 2008 or within 60 days thereafter. For Mr. Murchison, the number of stock options beneficially owned includes options for 64,216 shares held by his family limited partnership. | |
(4) | The amounts shown in this column consist of shares of restricted Centex common stock held by these individuals, which vest over time according to the schedule set forth in the restricted stock award. The restricted stock is subject to forfeiture and may not be sold or transferred during the vesting period. Holders of shares of restricted stock have the right to vote and receive dividends on the shares. | |
(5) | The amounts shown in this column consist of shares of Centex common stock that these individuals have the right to receive upon payout of restricted stock units they held that were vested on May 19, 2008 or will vest within 60 days thereafter. The restricted stock units were awarded to Mr. Barclay under our 2003 Equity Plan. The restricted stock units vest over time according to the schedule set forth in the restricted stock unit award agreement. Holders of stock units do not have the right to vote or receive dividends on the shares until vested units are converted into shares. | |
(6) | The amounts shown in this column consist of all common stock, options, restricted stock and restricted stock units beneficially owned by these individuals. | |
(7) | Mr. Barclay is the president, western region of Centex Real Estate Corporation, the managing general partner of Centex Homes, our homebuilding subsidiary, and has responsibility for the western region of Centex Homes. When referring to Mr. Barclay’s title, we use Centex Homes instead of Centex Real Estate Corporation. | |
(8) | Mr. Eller also serves as our president and chief operating officer. |
Common Stock Beneficially Owned | ||||||||
Name and Address of Beneficial Owner | Number of Shares | Percent of Class | ||||||
Legg Mason Capital Management, Inc. and LMM LLC (3) | 15,789,575 | (1) | 12.78% | (1) | ||||
100 Light Street Baltimore, MD 21202 | ||||||||
FMR LLC and Edward C. Johnson 3d (4) | 12,225,399 | (1) | 9.90% | (1) | ||||
82 Devonshire Street Boston, MA 02109 | ||||||||
Hotchkis and Wiley Capital Management, LLC (5) | 10,127,940 | (2) | 8.20% | (2) | ||||
725 S. Figueroa St., 39th Floor Los Angeles, CA 90017 | ||||||||
Oppenheimer Capital LLC (6) | 7,964,924 | (1) | 6.45% | (1) | ||||
1345 Avenue of the Americas, 49th Floor New York, NY 10105 | ||||||||
Barclays Global Investors, N.A. and certain of its affiliates (7) | 7,678,978 | (1) | 6.22% | (1) | ||||
45 Fremont Street San Francisco, CA 94105 |
(1) | Represents the number of shares beneficially owned as of December 31, 2007 for each person, entity or group divided by the number of shares of Centex common stock issued and outstanding on the record date, May 19, 2008. |
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(2) | Represents the number of shares beneficially owned as of April 30, 2008 for each person, entity or group divided by the number of shares of Centex common stock issued and outstanding on the record date, May 19, 2008. | |
(3) | Based solely on information contained in Amendment No. 3 to a Schedule 13G filed jointly by the reporting entities with the SEC on February 14, 2008 with respect to shares of Centex common stock beneficially owned. The Schedule 13G/A discloses that the reporting entities, taken as a whole, have sole voting power over no shares, shared voting power over 15,789,575 shares, sole dispositive power over no shares, and shared dispositive power over 15,789,575 shares. | |
(4) | Based solely on information provided in a Schedule 13G filed jointly by FMR, LLC (“FMR”) and Edward C. Johnson 3d (“Mr. Johnson”) with the SEC on January 10, 2008, with respect to shared Centex common stock beneficially owned. The Schedule 13G discloses that (i) Fidelity Management & Research Company (“Fidelity”), a wholly-owned subsidiary of FMR and an investment advisor, beneficially owns 11,871,000 shares as a result of providing investment advisory services to various investment companies. Mr. Johnson and FMR, through their control of Fidelity and the Fidelity funds, each has sole power to dispose of these shares. The sole power to vote or direct the voting of these shares resides with the funds’ boards of Trustees; (ii) Pyramis Global Advisors, LLC (“Pyramis Advisors”), an indirect wholly-owned subsidiary of FMR and an investment advisor, beneficially owns 1,000 shares. Mr. Johnson and FMR, through their control of Pyramis Advisors, each have sole dispositive power with respect to these shares and sole power to vote or to direct the voting of these shares; (iii) Pyramis Global Advisors Trust Company (“Pyramis Trust”), an indirect wholly-owned subsidiary of FMR and a bank, beneficially owns 85,099 shares. Mr. Johnson and FMR, through their control of Pyramis Trust, each has sole dispositive power with respect to the shares and sole power to vote or to direct the voting of these shares; and (iv) Fidelity International Limited (“FIL”), an investment advisor, is the beneficial owner of 268,300 shares. FIL has sole dispositive power with respect to these shares, FIL has sole power to vote or direct the voting of 225,100 of these shares and no power to vote or direct the voting of 43,200 of these shares. Fidelity has the same address as FMR. The address of Pyramis Advisors and Pyramis Trust is 53 State St., Boston, MA 02109. The address of FIL is Penbrook Hall, 42 Crow Ln., Hamilton, Bermuda. | |
(5) | Based solely on information contained in Amendment No. 4 to a Schedule 13G filed by the reporting entity with the SEC on May 9, 2008 with respect to shares of Centex common stock beneficially owned. The Schedule 13G/A discloses that the reporting entity has sole voting power over 6,227,800 shares, shared voting power over no shares, sole dispositive power over 10,127,940 shares, and shared dispositive power over no shares. | |
(6) | Based solely on information contained in Amendment No. 2 to Schedule 13G filed by the reporting entity with the SEC on April 18, 2008 with respect to shares of Centex common stock beneficially owned. The Schedule 13G/A disclosed that the reporting entity has sole voting power of 5,686,012 shares, shared voting power over no shares, sole dispositive power over 7,964,924 shares, and shared dispositive power over no shares. | |
(7) | Based solely on information contained in a Schedule 13G filed jointly by Barclays Global Investors, N.A. (“Barclays N.A.”), Barclays Global Fund Advisors (“Barclays Advisors”), Barclays Global Investors, Ltd. (“Barclays Investors”), Barclays Global Investors Japan Trust and Banking Company Limited (“Barclays Japan Trust”), Barclays Global Investors Japan Limited (“Barclays Japan Limited”), Barclays Global Investors Canada Limited (“Barclays Canada”), Barclays Global Investors Australia Limited (“Barclays Australia”), and Barclays Global Investors (Deutschland) AG (“Barclays AG”), with the SEC on February 8, 2008, with respect to shares of Centex common stock beneficially owned. The Schedule 13G discloses that (i) Barclays N.A. has sole voting power over 4,629,399 shares, shared voting power over no shares, sole dispositive power over 5,407,029 shares, and shared dispositive power over no shares; (ii) Barclays Advisors has sole voting power over 1,415,371 shares, shared voting power over no shares, sole dispositive power over 1,415,371 shares, and shared dispositive power over no shares; (iii) Barclays Investors has sole voting power over 475,936 shares, shared voting power over no shares, sole dispositive power over 580,709 shares and shared dispositive power over no shares; (iv) Barclays Japan Limited has sole voting power over 190,869 shares, shared voting power over no shares, sole dispositive power over 190,869 shares and shared dispositive power over no shares; (v) Barclays Canada has sole voting power over 85,000 shares, shared voting power over no shares, sole dispositive power over 85,000 shares, and shared dispositive power over no shares; and (vi) Barclays Japan Trust and Barclays Australia and Barclays AG, had no sole or shared voting power or sole or shared dispositive power with respect to shares of Centex common stock. The address of Barclays Advisors is 45 Fremont St., San Francisco, CA 94105. The address of Barclays Investors is Murray House, 1 Royal Mint Court, London, England EC3N 4HH. The address of Barclays Japan Trust and Barclays Japan Limited is Ebisu Prime Square Tower, 8th Floor, 1-1-39 Hiroo Shibuya-Ku, Tokyo 150-0012 Japan. The address of Barclays Canada is Brookfield Place, 161 Bay St., Toronto, Canada Ontario M5J 2S1. The address of Barclays Australia is Level 43, Grosvenor Place, 225 George St., Sydney, Australia NSW 1220. The address of Barclays AG is Apianstrasse 6, D-85774, Unterfohring, Germany. |
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• | Compensation Governance | 44 | ||||
• | Recent Changes to Compensation Practices | 44 | ||||
• | Compensation Philosophy | 45 | ||||
• | Compensation-Setting Decisions for Fiscal Year 2008 | 47 | ||||
• | Fiscal 2008 Performance | 52 | ||||
• | CEO Compensation | 52 | ||||
• | Other Executive Officer Compensation | 54 | ||||
• | Termination and Change in Control Arrangements | 55 | ||||
• | Perquisites | 56 | ||||
• | Executive Compensation for Fiscal Year 2009 | 56 | ||||
• | Additional Compensation Information | 57 |
• | Beginning in fiscal 2006, we began a process to reduce the amount of short-term and long-term incentive compensation awards for all our executives to better align them with competitive levels. The amounts awarded for fiscal 2008 are significantly lower than the amounts awarded for fiscal 2005. | |
• | In June 2006, we adopted a severance policy for the named executive officers and certain other executives that reduces the amount of cash severance payments payable upon a termination of employment to no more than 2.99 times the prior year’s total compensation. See “Executive Severance Policy” on page 77. | |
• | In February 2007, we implemented a “claw-back policy” pursuant to which the board may recoup the compensation paid to certain employees in certain circumstances if our financial statements are restated. See “Policy on Recoupment in Restatement Situations” on page 65. | |
• | In February 2007, the committee adopted a plain-English charter to govern its activities, which is available on our web site atwww.centex.comin the Investors area (Governance subsection). | |
• | In our pay planning for fiscal 2008, we began to target the pay levels of more |
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executives at median with better-defined comparators. | ||
• | Beginning in fiscal 2008, we separated the calculation of short-term incentive compensation (which continues to be determined based on specific financial and other performance goals) from that of long-term incentive compensation (which is now awarded at the beginning of the fiscal year, and payable based on achievement of performance goals set out in the award or through the appreciation of the value of stock). See “Process” on page 47. In addition, we increased the proportion of performance-based awards that we grant, in contrast to awards that vest based solely on time. For example, our long-term performance units, which we refer to as an LTPU or LTPUs, awarded beginning in May 2007, which comprise roughly one-half of the long-term awards for our senior executives, are performance-based, with payment dependent on Centex’s performance over a three-year period. See “Long-Term Awards for Fiscal 2008” on page 54. | |
• | Beginning in fiscal 2008, we capped bonuses payable under our annual incentive compensation plan at 200% of the applicable target. | |
• | In fiscal 2008, we increased the proportion of performance-based awards that we grant, in contrast to awards that vest based solely on time. For example, our long-term performance units, which we refer to as an LTPU or LTPUs, awarded beginning in May 2007, which comprise roughly one-half of the long-term awards for our senior |
executives, are performance-based, with payment dependent on Centex’s performance over a three-year period. See “Long-Term Awards for Fiscal 2008” on page 54. | ||
• | In 2008, we extended our stock ownership guidelines down to a greater percentage of long-term eligible employees and added a hold feature under which awarded shares must be held, and the after-tax value of stock option exercises and LTPU cash payments must be used to acquire shares, until the guideline is met. |
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Element | Objectives Achieved | Purpose | Target Competitive Position | |||
Base salary | • Attraction of qualified candidates • Competitive practice | Provide annual cash income based on: • level of responsibility, performance and experience • comparison to market pay information | • Compared to median of homebuilding peer group and general industry • Actual salary will vary based on the individual’s performance and experience in the position | |||
Annual cash incentive | • Pay-for-performance | Motivate and reward achievement of the following annual performance goals: | • Target compared to median of homebuilding peer group and general industry with adjustments as performance merits | |||
• corporate key metrics | ||||||
• other corporate and strategic goals | • Payout will vary based on actual performance | |||||
• performance of the business unit or function of the individual, as applicable | ||||||
Long-term equity and other incentives | • Stockholder alignment • Focus on long-term success • Pay-for-performance • Retention | Provide an incentive to create stockholder value and to achieve our long-term objectives through awards of: • performance-based share units • stock option grants • restricted stock awards | • Target compared to median of homebuilding peer group and general industry with adjustments as performance merits • Payout will vary based on actual stock performance • Payout of performance-based share units will also vary based on actual company performance | |||
Retirement benefits | • Retention | Provide competitive retirement benefit plans through 401(k) /profit sharing plan | • Benefits comparable to those of homebuilding peer group and general industry | |||
Perquisites | • Competitive practice | Encourage focus on business operations and, where required, for competitive practice | • Programs for executive officers reviewed by the committee annually | |||
Post-termination compensation (change in control, severance and retirement) | • Retention | Encourage attraction and retention of executives critical to our long-term success and competitiveness: | • Programs for executive officers reviewed by the committee | |||
• executive severance plan, which provides eligible executives with payments and benefits in the event of certain involuntary terminations, including following a change in control (subject to committee approval at certain levels) | ||||||
• executive change in control agreements providing for only a tax gross-up for certain “excess compensation” resulting solely from accelerated vesting in certain change in control events |
• | Market Comparisons — We compare ourselves to both industry-specific peers and general industry peers for compensation and benefits comparison purposes. |
• | Key operations positions (i.e., Mr. Eller and Mr. Barclay) are compared primarily against industry-specific practices, with consideration given to general industry practices. | ||
• | Key functional positions (i.e., Ms. Smith, Mr. Stewart and Mr. Woram) are |
compared primarily against general industry practices, with consideration given to industry-specific practices. |
• | Competitive Pay Targets — Pay levels are initially targeted at the median of the relevant industry-specific or general industry peer group (market median) for expected levels of performance (market median), with the opportunity for the committee to adjust pay to significantly exceed, or be significantly lower than, the market median when merited by performance. For purposes of setting individual compensation potentials, pay levels include base salary, short-term incentive compensation, and the grant date value of long-term awards. | |
• | Performance Target Setting — Performance is measured against both absolute performance standards and the performance of our peers. Absolute performance standards are determined |
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taking into account expected levels of competitive performance. | ||
• | Performance Metrics — Short-term incentive compensation will be based on short-term financial and operational metrics that ultimately drive long-term stockholder value. Long-term performance metrics, when applicable, will be longer-term (typically three years) measures of financial and operational performance that drive long-term stockholder value. | |
• | Level of Organizational Performance — All executives have a portion of their incentive compensation, including long-term compensation, focused on overall company performance. Each executive’s short-term incentive compensation primarily reflects the company’s total results, except for the portion related to his or her performance development plan. | |
• | Mix of Pay — The amount of at-risk compensation reflects each position’s degree of impact on business results. The committee believes that, in the case of the named executive officers, approximately 50% of total pay (exclusive of base salary) at expected performance levels should consist of long-term incentive compensation. |
• | At the beginning of the fiscal year: (1) setting overall company or business unit performance goals for the year, and (2) setting individual levels of target short-term incentive compensation for the year and a range of value of potential long-term awards to be awarded after the end of the year (unrelated to the fiscal year’s performance, but related to future years’ performance). | |
• | After the end of the fiscal year: (3) measuring actual performance and comparing it to the approved performance metrics to determine individual compensation potentials under the performance plan, and then exercising discretion to reduce the amounts, if |
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appropriate, and (4) awarding long-term incentive compensation to the named executive officers. | ||
These steps are described in more detail below. |
Catherine | ||||||||||||
R. Smith, | ||||||||||||
Robert S. | ||||||||||||
Stewart, | ||||||||||||
Timothy R. | David L. | and Brian | ||||||||||
Goals | Eller | Barclay | J. Woram | |||||||||
Corporate key financial goals | 100 | % | 25 | % | 75 | % | ||||||
Other corporate financial and strategic performance goals | — | 25 | % | 25 | % | |||||||
Performance of business unit | — | 50 | % | — | ||||||||
Total | 100 | % | 100 | % | 100 | % |
• | Operating income, which consists of earnings from continuing operations before income taxes from Centex as a whole for fiscal 2008. | |
• | Asset turnover, which consists of total Centex revenue divided by average net assets for fiscal 2008. |
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• | strategy execution | |
• | process improvement | |
• | cost reduction | |
• | talent development and management |
• | Operating margin for the western region of Centex Homes (40%); | |
• | Customer satisfaction for the western region, which was determined by the J.D. Power and Associates Home Builder Customer Satisfaction Ratings for the homebuilding locations in the western region as of November 2007, when we discontinued our subscription to this survey (20%); and | |
• | Asset turnover of the western region, which consists of total revenue of the western region divided by average net assets for the western region for fiscal 2008 (40%). |
• | Annual cash compensation (base salary and short-term incentive compensation (cash bonus)); and | |
• | Long-term equity and performance-based incentive compensation. |
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Target | Target | Target | ||||||||||||||
Short- | Long- | Total | ||||||||||||||
Term | Term | Direct | ||||||||||||||
Incentive | Incentive | Annual | ||||||||||||||
Base | Compen- | Compen- | Compen- | |||||||||||||
Name | Salary ($) | sation ($) | sation ($) | sation ($) | ||||||||||||
Timothy R. Eller | 920,000 | 4,000,000 | 4,000,000 | 8,920,000 | ||||||||||||
Catherine R. Smith(1) | 525,000 | 656,250 | 1,700,000 | 2,928,250 | ||||||||||||
David L. Barclay | 475,000 | 1,900,000 | 2,000,000 | 4,375,000 | ||||||||||||
Robert S. Stewart | 390,000 | 390,000 | 800,000 | 1,580,000 | ||||||||||||
Brian J. Woram | 450,000 | 562,500 | 800,000 | 1,812,500 |
(1) | Ms. Smith’s base salary was increased to $572,000 effective October 16, 2007. |
Target Payment | ||||||||
Name | Amount | Possible Payout | ||||||
Timothy R. Eller | 435 | % | 0% - 200% of target payment amount | |||||
Catherine R. Smith | 125 | % | ||||||
David L. Barclay | 400 | % | ||||||
Robert S. Stewart | 100 | % | ||||||
Brian J. Woram | 125 | % |
• | Base salaries are adjusted on approximately June 1 of each year, while theSummary Compensation Tableincludes actual salaries paid for the full fiscal year. | |
• | Short-term incentive compensation is included at the target level, while theSummary Compensation Tablereflects the actual amount awarded for fiscal 2008. | |
• | Long-term incentive awards are valued at the full grant date value instead of the amounts required to be included in theSummary Compensation Table. Accounting rules require long-term awards that vest over multiple years to be expensed in equal annual portions over the vesting period, so that expense appears in later years. |
• | In setting total annual direct compensation targets, the committee does not include deferred compensation earnings or other compensation (including bonuses paid by reference to stock options awarded in 1998), although those amounts are required to be included in theSummary Compensation Table. |
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• | Conducting a review of the competitive market and peer data (including base salary, annual incentive targets, long-term incentive targets and estimated performance data) for our CEO and his direct reports (including the named executive officers); | |
• | At the committee’s request, reviewing and commenting on recommendations by management concerning executive pay programs, including pay philosophy, pay levels, incentive pay mix, program changes and redesign, special awards, change in control provisions, promotions, retirement, compensation trends, etc., as desired by the committee; and |
• | Reviewing and commenting on the committee’s report for the proxy statement. |
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Potential Payout | ||||||||||||||||
as % of Target | ||||||||||||||||
0% | 100% | 200% | Actual | |||||||||||||
Operating income | $ | 0 | $256 MM | $420 MM | -$2,875 MM | |||||||||||
Asset turns | 0.50 | 1.00 | 1.20 | 1.10 |
Potential Payout | ||||||||||||||||
as % of Target | ||||||||||||||||
0% | 100% | 200% | Actual | |||||||||||||
Operating margin | <-1.0 | % | 2.6 | % | 6.3 | % | -51.0 | % | ||||||||
Customer satisfaction | <8.2 | 8.5 | 9.1 | 9.1 | ||||||||||||
Asset turns | <1.00 | 1.20 | 1.40 | 1.12 |
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Calculated | ||||||||||||
Short-Term | ||||||||||||
Incentive | Actual | |||||||||||
Target | Compensation | Short-Term | ||||||||||
Short-Term | per Plan | Incentive | ||||||||||
Incentive | (including | Compensation | ||||||||||
Name | Compensation ($) | impairments) ($) | Payout ($) | |||||||||
Timothy R. Eller | 4,000,000 | 3,000,000 | 0 |
Principal Compensation Committee Decisions
Cash-Based | Long Term Awards | |||||||||||||||||||
Short- | Grant | |||||||||||||||||||
Term | Date Fair | Other | ||||||||||||||||||
Incentive | Value of | Long- | ||||||||||||||||||
Base | Compen- | Stock | Term | |||||||||||||||||
Meeting | Salary | sation | Options | Awards | ||||||||||||||||
Date | ($) | ($) | ($) | ($) (1) | Total ($) | |||||||||||||||
May 06 | 920,000 | 10,633,500 | 5,316,744 | 5,316,756 | 22,187,000 | |||||||||||||||
May 07 | 920,000 | 0 | 1,500,000 | 2,000,000 | 4,420,000 | |||||||||||||||
May 08 | 920,000 | 0 | 2,000,000 | 2,000,000 | 4,920,000 |
(1) | For 2006, consisted of restricted stock and deferred cash awards; for 2007 and 2008, consisted of LTPUs. |
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Calculated | ||||||||||||
Short-Term | ||||||||||||
Incentive | Actual | |||||||||||
Target | Compensation | Short-Term | ||||||||||
Short-Term | per Plan | Incentive | ||||||||||
Incentive | (including | Compensation | ||||||||||
Compensation | impairments) | Payout | ||||||||||
Name | ($) | ($) | ($) | |||||||||
Catherine R. Smith | 656,250 | 533,000 | 492,188 | |||||||||
David L. Barclay | 1,900,000 | 1,240,000 | 340,000 | |||||||||
Robert S. Stewart | 390,000 | 317,000 | 244,000 | |||||||||
Brian J. Woram | 562,500 | 457,000 | 352,000 |
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Potential Payout | ||||||||||||
as % of Target | ||||||||||||
0% | 100% | 200% | ||||||||||
Relative EPS growth (50%) | 9th place | 5th place | 1st place | |||||||||
Relative Return on Equity (50%) | 9th place | 5th place | 1st place |
Name | LTPU Award ($) | |||
Catherine R. Smith | 949,986 | |||
David L. Barclay | 1,499,971 | |||
Robert S. Stewart | 549,985 | |||
Brian J. Woram | 799,956 |
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Grant Date | Target Value | |||||||
Fair Value of | of Long-Term | |||||||
Name | Stock Options ($) | Performance Units ($) | ||||||
Timothy R. Eller | 2,000,000 | 2,000,000 | ||||||
Catherine R. Smith | 750,000 | 750,000 | ||||||
David L. Barclay | 750,000 | 750,000 | ||||||
Robert S. Stewart | 250,000 | 250,000 | ||||||
Brian J. Woram | 300,000 | 300,000 |
Potential Payout | ||||||||||||||||
as % of Target | ||||||||||||||||
0% | 25% | 100% | 200% | |||||||||||||
Relative total shareholder return (expressed as a percentile) | <25th | 25th | 50th | 100th |
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Development Committee Report
Development Committee:
Juan L. Elek
Matthew K. Rose
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Change in | ||||||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||||||||||
Non- | ||||||||||||||||||||||||||||||||||||
Non-Equity | qualified | |||||||||||||||||||||||||||||||||||
Incentive | Deferred | |||||||||||||||||||||||||||||||||||
Plan | Compen- | All Other | ||||||||||||||||||||||||||||||||||
Stock | Option | Compen- | sation | Compen- | ||||||||||||||||||||||||||||||||
Name and | Fiscal | Bonus | Awards | Awards | sation | Earnings | sation | |||||||||||||||||||||||||||||
Principal Position | Year | Salary ($) | ($) (1) | ($) (2) | ($) (3) | ($) (4) | ($) (5) | ($) (6) | Total ($) | |||||||||||||||||||||||||||
Timothy R. Eller, | 2008 | 920,000 | — | 6,762,321 | 3,701,346 | 216,459 | 8,254 | 1,600,477 | 13,208,857 | |||||||||||||||||||||||||||
Chairman, Chief Executive | 2007 | 920,000 | — | 6,260,982 | 4,669,196 | 325,253 | — | 100,519 | 12,275,950 | |||||||||||||||||||||||||||
Officer, Director | ||||||||||||||||||||||||||||||||||||
Catherine R. Smith, | 2008 | 542,375 | 492,188 | 693,533 | 321,872 | — | — | 25,546 | 2,075,514 | |||||||||||||||||||||||||||
Executive Vice President and | 2007 | 229,167 | 1,085,595 | 130,002 | 130,002 | — | — | 179,352 | 1,754,118 | |||||||||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||||||||||
David L. Barclay, | 2008 | 470,833 | — | 978,152 | 843,098 | 405,193 | 2,523 | 166,211 | 2,866,010 | |||||||||||||||||||||||||||
Co-President/Co-Chief Operating | 2007 | 450,000 | — | 909,076 | 987,871 | 113,765 | — | 26,839 | 2,487,551 | |||||||||||||||||||||||||||
Officer — Centex Homes | ||||||||||||||||||||||||||||||||||||
Robert S. Stewart, | 2008 | 380,000 | — | 450,665 | 602,159 | 283,239 | 1,166 | 22,360 | 1,739,589 | |||||||||||||||||||||||||||
Senior Vice President — Strategy, | 2007 | 330,000 | — | 449,025 | 832,804 | 54,166 | — | 29,912 | 1,695,907 | |||||||||||||||||||||||||||
Marketing, Sales and Corporate Development | ||||||||||||||||||||||||||||||||||||
Brian J. Woram, | 2008 | 437,500 | — | 455,006 | 465,715 | 371,902 | 764 | 107,284 | 1,838,171 | |||||||||||||||||||||||||||
Senior Vice President and | 2007 | 375,000 | — | 380,912 | 492,793 | 25,925 | — | 29,639 | 1,304,269 | |||||||||||||||||||||||||||
Chief Legal Officer |
(1) | The amount shown for Ms. Smith for fiscal 2008 represents her guaranteed short-term incentive compensation cash award for such fiscal year. The amount shown for Ms. Smith for fiscal 2007 represents (a) the $300,000 starting bonus she received when she joined Centex in October 2006, (b) the $500,000 initial cash award she received in two installments on November 1, 2006 and April 1, 2007 and (c) her guaranteed short-term incentive compensation cash award for fiscal year 2007 of $285,595 paid in May 2007. Except for Ms. Smith, the named executive officers did not receive payments that would be characterized as “Bonus” payments for purposes of this column. They did, however, receive cash incentive compensation awards for fiscal 2008, which are reported in the Non-Equity Incentive Plan Compensation column. | |
(2) | Represents the dollar amount recognized for financial statement reporting purposes for the applicable fiscal year in accordance with FAS 123R of restricted stock, restricted stock unit and LTPU awards, and thus includes amounts for awards granted in and/or prior to the applicable fiscal year. Assumptions used in the calculation of these amounts are included in footnote (K) to our audited financial statements for fiscal 2008 included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2008 and in footnote (K) to our audited financial statements for fiscal 2007 included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2007. | |
Grant Date Fair Value vs. Market Value of “Stock Awards”.Due to the decline in our stock price, if the stock awards for which expenses are shown in this column were valued in accordance with the market value of Centex’s common stock as of March 31, 2008 rather than the grant date fair value reflected in theSummary Compensation Table, their valuations would differ as shown in the following supplemental table. |
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Based on Grant Date Fair Value (a) | Based on 3/31/08 Market Value ($24.21) (b) | |||||||||||||||||||||||
May 2008 | Prior Year | May 2008 | Prior Year | |||||||||||||||||||||
Name | Grants ($) | Grants ($) | Total | Grants ($) | Grants ($) | Total | ||||||||||||||||||
Timothy R. Eller | 1,027,569 | 5,734,752 | 6,762,321 | 1,027,569 | 2,914,915 | 3,942,484 | ||||||||||||||||||
Catherine R. Smith (c) | 433,526 | 260,007 | 693,533 | 389,176 | 119,946 | 509,122 | ||||||||||||||||||
David L. Barclay | 318,765 | 659,387 | 978,152 | 289,792 | 285,221 | 575,013 | ||||||||||||||||||
Robert S. Stewart | 135,851 | 314,814 | 450,665 | 116,344 | 135,084 | 251,428 | ||||||||||||||||||
Brian J. Woram | 199,499 | 255,507 | 455,006 | 170,235 | 110,052 | 280,287 |
(3) | Represents the dollar amount recognized for financial statement reporting purposes for the applicable fiscal year in accordance with FAS 123R of stock option awards, and thus includes amounts for awards granted in and/or prior to the applicable fiscal year. The FAS 123R expenses for option awards shown are based on the Black-Scholes valuations of stock options granted, which in turn are based on the value of Centex common stock on the date of grant, which was at higher levels than its market value as of fiscal 2008 year-end. Assumptions used in the calculation of these amounts are included in footnote (K) to our audited financial statements for fiscal 2008 included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2008 and in footnote (K) to our audited financial statements for fiscal 2007 included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2007. | |
Grant Date Fair Value vs. Market Value of “Option Awards”.Due to the decline in the value of Centex common stock, if the valuation for fiscal 2008 expense for the same options were based on their intrinsic value (calculated as the difference between the value of the option based upon the share price of Centex common stock as of the market close on March 31, 2008 of $24.21 and the option exercise price) rather than the FAS 123R expense, all of the same options would be “out of the money” and have no intrinsic value as reflected in the supplemental table below. For example, as shown below, the total valuation of options for Mr. Eller if based on “intrinsic” valuation would be zero, instead of the FAS 123R expense valuation amount of $3.7 million for fiscal 2008 shown in the Option Awards column of theSummary Compensation Table. |
FY08 Expense | ||||||||||||||||||||||||||||
Option | Assuming | |||||||||||||||||||||||||||
Grant Date Fair | Intrinsic Value | FY08 Expense | Intrinsic Value | |||||||||||||||||||||||||
Share Price at | Value per Share | as of | per | as of | ||||||||||||||||||||||||
Name | Grant Date | Grant Date ($) | ($) (a) | Total Shares | 3/31/08 ($) | FAS 123R ($) (b) | 3/31/08 ($) (c) | |||||||||||||||||||||
Timothy R. Eller | 5/12/05 | 57.36 | 22.90 | 216,000 | — | 1,681,776 | — | |||||||||||||||||||||
5/11/06 | 54.50 | 20.08 | 264,778 | — | 1,772,070 | — | ||||||||||||||||||||||
5/10/07 | 45.53 | 16.61 | 90,307 | — | 247,500 | — | ||||||||||||||||||||||
— | 3,701,346 | — | ||||||||||||||||||||||||||
Catherine R. Smith | 10/16/06 | 52.48 | 22.14 | 58,717 | — | 259,999 | — | |||||||||||||||||||||
5/10/07 | 45.53 | 16.61 | 22,576 | — | 61,873 | — | ||||||||||||||||||||||
— | 321,872 | — | ||||||||||||||||||||||||||
David L. Barclay | 5/12/05 | 57.36 | 22.90 | 44,211 | — | 344,227 | — | |||||||||||||||||||||
5/11/06 | 54.50 | 20.08 | 65,295 | — | 436,998 | — | ||||||||||||||||||||||
5/10/07 | 45.53 | 16.61 | 22,576 | — | 61,873 | — | ||||||||||||||||||||||
— | 843,098 | — | ||||||||||||||||||||||||||
Robert S. Stewart | 5/12/05 | 57.36 | 22.90 | 40,000 | — | 311,440 | — | |||||||||||||||||||||
5/11/06 | 54.50 | 20.08 | 37,525 | — | 249,469 | — | ||||||||||||||||||||||
5/10/07 | 45.53 | 16.61 | 15,051 | — | 41,250 | — | ||||||||||||||||||||||
— | 602,159 | — | ||||||||||||||||||||||||||
Brian J. Woram | 5/12/05 | 57.36 | 22.90 | 19,827 | — | 154,373 | — | |||||||||||||||||||||
5/11/06 | 54.50 | 20.08 | 37,275 | — | 249,469 | — | ||||||||||||||||||||||
5/10/07 | 45.53 | 16.61 | 22,576 | — | 61,873 | — | ||||||||||||||||||||||
— | 465,715 | — |
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(4) | The amounts shown as “Non-Equity Incentive Plan Compensation” consist of the following: |
Short-Term (Cash) | Earnings on | |||||||||||
Fiscal | Incentive | Deferred Cash | ||||||||||
Name | Year | Compensation ($) (a) | Compensation ($) (b)(c) | |||||||||
Timothy R. Eller | 2008 | — | 216,459 | |||||||||
2007 | — | 325,253 | ||||||||||
Catherine R. Smith | 2008 | — | — | |||||||||
2007 | — | — | ||||||||||
David L. Barclay | 2008 | 340,000 | 65,193 | |||||||||
2007 | 19,794 | 93,971 | ||||||||||
Robert S. Stewart | 2008 | 244,000 | 39,239 | |||||||||
2007 | — | 54,166 | ||||||||||
Brian J. Woram | 2008 | 352,000 | 19,902 | |||||||||
2007 | — | 25,925 |
(5) | Represents interest payments earned on prior year deferred cash compensation awards under our Executive Deferred Compensation Plan based on our current blended borrowing cost, which is in excess of an applicable federal reference point. The amounts are also included in the Non-Equity Incentive Plan Compensation column and, therefore, have been double-counted. |
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(6) | The amounts shown as “All Other Compensation” consist of the following: |
Fiscal | Matching 401k | Profit Sharing Plan | SERP | |||||||||||||||||||||
Name | Year | Perquisites ($) (a) | Contributions ($) (b) | Contributions ($) (c) | Contributions ($) (d) | Other ($) (e) | ||||||||||||||||||
Timothy R. Eller | 2008 | — | — | — | — | 1,600,477 | ||||||||||||||||||
2007 | — | — | 6,637 | 20,850 | 73,032 | |||||||||||||||||||
Catherine R. Smith | 2008 | 10,241 | 4,290 | — | — | 11,015 | ||||||||||||||||||
2007 | 177,370 | — | — | — | 1,982 | |||||||||||||||||||
David L. Barclay | 2008 | 14,490 | 2,969 | — | — | 148,752 | ||||||||||||||||||
2007 | 14,281 | — | 6,595 | 5,963 | — | |||||||||||||||||||
Robert S. Stewart | 2008 | 17,596 | 2,925 | — | — | 1,839 | ||||||||||||||||||
2007 | 18,012 | — | 6,559 | 3,188 | 2,153 | |||||||||||||||||||
Brian J. Woram | 2008 | 14,254 | 3,375 | — | — | 89,655 | ||||||||||||||||||
2007 | 17,986 | — | 6,574 | 4,200 | 879 |
Personal Use | ||||||||||||||||||||||||||||||||
Use of | Annual | Personal Use | of Sporting | Total | ||||||||||||||||||||||||||||
Auto | Company Car | Physical | of Company | and Event | Tax Gross-Up | Perquisites | ||||||||||||||||||||||||||
Name | Allowance ($) | ($) (i) | Club Dues ($) | Exam ($) | Aircraft ($) (ii) | Tickets ($) (iii) | ($) (iv) | ($) | ||||||||||||||||||||||||
Catherine R. Smith | 8,400 | — | — | 1,841 | — | — | — | 10,241 | ||||||||||||||||||||||||
David L. Barclay | — | 13,427 | — | — | — | — | 1,063 | 14,490 | ||||||||||||||||||||||||
Robert S. Stewart | 7,200 | — | 7,795 | 2,601 | — | — | — | 17,596 | ||||||||||||||||||||||||
Brian J. Woram | 6,000 | — | 8,254 | — | — | — | — | 14,254 |
(i) | Our incremental expense for Mr. Barclay’s use of a company car is the total annual cost of its fuel and maintenance and the annual depreciation expense for the car. | |
(ii) | During fiscal 2008, we sold the corporate jet owned by Centex, although we retained a partial interest in and access to a leased jet. Company aircraft is used primarily for business travel. However, there are occasions when personal use occurs. We calculate the aggregate incremental cost of personal use of company owned or provided aircraft based on our average variable operating costs for the fiscal year. Variable operating costs include fuel, maintenance, on-board catering, landing/ramp fees and other miscellaneous variable costs. The total variable operating costs for the fiscal year are divided by the number of hours our aircraft flew during the fiscal year to derive an average variable cost per hour. This average variable cost per hour is then multiplied by the hours flown for personal use to derive the incremental cost. Because company aircraft are used primarily for business travel, the methodology excludes fixed costs that do not change based on usage, such as pilots’ and other employees’ salaries, purchase or lease costs of the aircraft and non-trip related maintenance and hangar expenses. Directors, executives and their families and invited guests occasionally fly on company aircraft as additional passengers on business flights. In those cases, our aggregate incremental cost is a de minimis amount and therefore no amount is reflected in the table; however, the value of this benefit (calculated pursuant to IRS guidelines) is imputed as income to the director or executive. | |
(iii) | We purchase tickets to various sporting and entertainment events, which we use to promote business development and partnership building, and to promote our community involvement. If these tickets are not used for business purposes, they are made available to our employees, including the named executive officers, as a form of employee recognition and reward. There is no aggregate incremental cost to Centex if one of the named |
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executive officers uses a ticket for personal purposes, and therefore, no amount is reflected in the table for this occasional personal use. | ||
(iv) | Mr. Barclay receives an income tax gross-up payment associated with his personal use of a company car. |
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• | the board or committee concludes in good faith that the person engaged in fraud or intentional misconduct that caused or partially caused the need for the restatement; | |
• | the amount of the incentive compensation was calculated upon the achievement of financial results that were subsequently the subject of a restatement; and | |
• | the amount of the incentive compensation that would have been awarded to the person had the financial results been properly reported would have been lower than the amount actually awarded. |
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Estimated | Estimated | All Other | ||||||||||||||||||||||||||||||||||||||||||||||||||
Possible Payouts | Possible Payouts | All Other Stock Awards: | Option | |||||||||||||||||||||||||||||||||||||||||||||||||
Under Non-Equity | Under Equity | Number of Shares | Awards: | Grant | ||||||||||||||||||||||||||||||||||||||||||||||||
Approval | Incentive Plan Awards (1) | Incentive Plan Awards (2) | of Stock or Units | Number | Exercise | Date | ||||||||||||||||||||||||||||||||||||||||||||||
Date if | of | or Base | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||
Different | Restricted | Securities | Price of | of Stock | ||||||||||||||||||||||||||||||||||||||||||||||||
from | Restricted | Stock | Underlying | Option | and Option | |||||||||||||||||||||||||||||||||||||||||||||||
Grant | Grant | Thresh- | Target | Maxi- | Thresh- | Target | Maxi- | Stock | Units | Options | Awards | Awards | ||||||||||||||||||||||||||||||||||||||||
Name | Date | Date (3) | old ($) | ($) | mum ($) | old ($) | ($) | mum ($) | (#) (4) | (#) (5) | (#) (6) | ($/Sh) | ($) (7) | |||||||||||||||||||||||||||||||||||||||
Timothy R. Eller | 5/10/07 | 90,307 | 45.53 | 1,500,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
5/17/07 | 0 | 4,000,000 | 8,000,000 | 0 | 2,000,000 | — | ||||||||||||||||||||||||||||||||||||||||||||||
Catherine R. Smith | 5/10/07 | 8,236 | 374,985 | |||||||||||||||||||||||||||||||||||||||||||||||||
5/10/07 | 22,576 | 45.53 | 374,987 | |||||||||||||||||||||||||||||||||||||||||||||||||
5/17/07 | 0 | 656,250 | 1,312,500 | 0 | 950,000 | — | ||||||||||||||||||||||||||||||||||||||||||||||
10/26/07 | 10/10/07 | 76,628 | (8) | 2,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
David L. Barclay | 5/10/07 | 8,236 | 374,985 | |||||||||||||||||||||||||||||||||||||||||||||||||
5/10/07 | 22,576 | 45.53 | 374,987 | |||||||||||||||||||||||||||||||||||||||||||||||||
5/17/07 | 0 | 1,900,000 | 3,800,000 | 0 | 1,500,000 | — | ||||||||||||||||||||||||||||||||||||||||||||||
Robert S. Stewart | 5/10/07 | 5,490 | 249,960 | |||||||||||||||||||||||||||||||||||||||||||||||||
5/10/07 | 15,051 | 45.53 | 249,997 | |||||||||||||||||||||||||||||||||||||||||||||||||
5/17/07 | 0 | 390,000 | 780,000 | 0 | 550,000 | — | ||||||||||||||||||||||||||||||||||||||||||||||
Brian J. Woram | 5/10/07 | 8,236 | 374,985 | |||||||||||||||||||||||||||||||||||||||||||||||||
5/10/07 | 22,576 | 45.53 | 374,987 | |||||||||||||||||||||||||||||||||||||||||||||||||
5/17/07 | 0 | 562,500 | 1,125,000 | 0 | 800,000 | — |
(1) | Represents the potential non-equity incentive compensation (expressed as a dollar value) each executive could earn for fiscal 2008 under the performance goals established under our fiscal 2008 short-term incentive compensation program, as described under “Setting Performance Goals” on page 48. These awards were granted in early fiscal 2008 under our Annual Plan and 2003 Equity Plan. At the time of the grant, the incentive compensation award could range from the threshold amount of zero (the minimum amount payable) to 200% of target, depending on the extent to which the applicable performance goals were achieved. By virtue of the terms of Ms. Smith’s offer letter, the minimum amount of cash bonus that she is to receive in fiscal 2008 is 75% of the target amount. This guaranteed amount was paid and is reflected in the Bonus column in theSummary Compensation Tableon page 60. | |
The Annual Plan and 2003 Equity Plan contain limitations on the awards that can be paid out or granted under the plans. In addition, the compensation committee had discretionary authority to reduce the amount of awards earned under the short-term incentive compensation program. | ||
The actual non-equity incentive compensation awards made to the executives named in the table for fiscal 2008 are not included in the table because the awards were made in May 2008 after the end of the fiscal year. These awards are described under “Short-Term Incentive Payouts for Fiscal 2008” on page 54 and are included in the Non-Equity Incentive Plan Compensation column (in the Bonus column for Ms. Smith) in theSummary Compensation Tableon page 60. | ||
(2) | Represents the potential equity incentive plan compensation (expressed as a dollar value) each executive could earn under LTPUs established under the 2003 Equity Plan. The LTPUs were awarded in May 2007 and will be paid in cash in May 2010 provided the goals are met. At the time of grant, the performance awards could range from the threshold amount of zero to 200% of target, depending on our relative performance on two performance metrics against our peers, and would be further adjusted by the change in price of Centex common stock between the date of grant and March 31, 2010. The performance metrics are earnings per share growth and return on equity. These awards are described under “Long-Term Awards for Fiscal 2008” on page 54. | |
(3) | This restricted stock award to Ms. Smith was approved by the committee on October 10, 2007 and ratified by our independent directors. In accordance with our policies regarding the grant of equity awards other than at the annual, first quarter meeting of the committee (described on page 67), the committee specified the third business day after our second quarter fiscal 2008 earnings release as the grant date for this award. This award is described under “Long-Term Awards for Fiscal 2008” on page 54. |
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(4) | Shares of restricted stock awarded in May 2007 for performance in fiscal 2007. The awards were made under the 2003 Equity Plan. The restricted stock vests at the rate of 331/3% per year on each of March 31, 2009, 2010 and 2011. The unvested restricted stock is forfeited if we cease to employ the holder before the vesting date. All shares of restricted stock vest immediately upon the holder’s death or disability or upon a change in control of Centex. Holders of restricted stock have the right to vote and receive dividends on the shares. | |
(5) | Restricted stock units awarded in May 2007 for performance in fiscal 2007. The awards were made under the 2003 Equity Plan. The stock units represent the right to receive on the payout date specified in the award a number of shares of Centex common stock equal to the number of units awarded, subject to vesting requirements. The units do not entitle the recipients to receive dividends or to any other rights as a stockholder. The units vest at the rate of 331/3% per year on each of March 31, 2009, 2010 and 2011. | |
(6) | Options granted in May 2007 for performance in fiscal 2007. The options were granted under the 2003 Equity Plan or the 2001 Stock Plan. The options vest at the rate of 331/3% per year on each of March 31, 2009, 2010 and 2011. All the options have a seven-year term. | |
(7) | The grant date fair value of the restricted stock, restricted stock unit or stock option awards computed in accordance with FAS 123R. | |
(8) | Shares of restricted stock awarded to Ms. Smith in October 2007. The award was made under the 2003 Equity Plan. The restricted stock vests at the rate of 25% per year on each of the first four anniversaries of the date of grant. The unvested restricted stock is forfeited if we cease to employ Ms. Smith before the vesting date. All shares of restricted stock vest immediately upon her death or disability or upon a change in control of Centex. Ms. Smith has the right to vote and receive dividends on the shares. |
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Option Awards (1) | ||||||||||||||||||||
Number of Securities | ||||||||||||||||||||
Underlying Unexercised Options (#) | ||||||||||||||||||||
Option | Option | |||||||||||||||||||
Name | Grant Date | Exercisable | Unexercisable | Exercise Price ($) | Expiration Date | |||||||||||||||
Timothy R. Eller | 4/1/99 | 355,518 | 16.23 | 4/1/09 | ||||||||||||||||
4/1/00 | 344,408 | 10.72 | 4/1/10 | |||||||||||||||||
4/1/02 | 404,402 | 22.68 | 4/1/09 | |||||||||||||||||
5/14/03 | 218,754 | 31.84 | 5/14/10 | |||||||||||||||||
5/14/04 | 216,000 | 45.24 | 5/14/11 | |||||||||||||||||
5/12/05 | 216,000 | 57.36 | 5/12/12 | |||||||||||||||||
5/11/06 | 176,518 | 88,260 | 54.50 | 5/11/13 | ||||||||||||||||
5/10/07 | - | 90,307 | 45.53 | 5/10/14 | ||||||||||||||||
Catherine R. Smith | 10/16/06 | 11,743 | 46,974 | 52.48 | 10/16/13 | |||||||||||||||
5/10/07 | - | 22,576 | 45.53 | 5/10/14 | ||||||||||||||||
David L. Barclay | 4/1/99 | 33,330 | 16.23 | 4/1/09 | ||||||||||||||||
4/1/00 | 29,774 | 10.72 | 4/1/10 | |||||||||||||||||
4/1/02 | 25,776 | 22.68 | 4/1/09 | |||||||||||||||||
5/14/03 | 81,548 | 31.84 | 5/14/10 | |||||||||||||||||
5/14/04 | 37,017 | 45.24 | 5/14/11 | |||||||||||||||||
5/12/05 | 44,211 | 57.36 | 5/12/12 | |||||||||||||||||
5/11/06 | 43,530 | 21,765 | 54.50 | 5/11/13 | ||||||||||||||||
5/10/07 | - | 22,576 | 45.53 | 5/10/14 | ||||||||||||||||
Robert S. Stewart | 5/15/00 | 66,660 | 10.69 | 5/15/10 | ||||||||||||||||
4/1/02 | 66,660 | 22.68 | 4/1/09 | |||||||||||||||||
5/14/03 | 53,328 | 31.84 | 5/14/10 | |||||||||||||||||
5/14/04 | 48,000 | 45.24 | 5/14/11 | |||||||||||||||||
5/12/05 | 40,000 | 57.36 | 5/12/12 | |||||||||||||||||
5/11/06 | 24,850 | 12,425 | 54.50 | 5/11/13 | ||||||||||||||||
5/10/07 | - | 15,051 | 45.53 | 5/10/14 | ||||||||||||||||
Brian J. Woram | 4/1/99 | 26,664 | 16.23 | 4/1/09 | ||||||||||||||||
4/1/00 | 33,330 | 10.72 | 4/1/10 | |||||||||||||||||
4/1/02 | 39,330 | 22.68 | 4/1/09 | |||||||||||||||||
5/14/03 | 41,996 | 31.84 | 5/14/10 | |||||||||||||||||
5/14/04 | 15,964 | 45.24 | 5/14/11 | |||||||||||||||||
5/12/05 | 19,827 | 57.36 | 5/12/12 | |||||||||||||||||
5/11/06 | 24,850 | 12,425 | 54.50 | 5/11/13 | ||||||||||||||||
5/10/07 | - | 22,576 | 45.53 | 5/10/14 |
(1) | The stock options become exercisable in accordance with the vesting schedule below. |
Grant Date | Vesting Schedule | |
5/11/2006 | 331/3% per year on March 31, 2007, 2008 and 2009 | |
10/16/2006 | 20% per year beginning on the first anniversary of the date of grant | |
5/10/2007 | 331/3% per year beginning on the second anniversary of the date of grant |
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Time-Based | Performance-Based | |||||||||||||||||||||||||||
Vesting Awards (1)(2) | Vesting Awards (3) | |||||||||||||||||||||||||||
Number of Shares | Market Value of Shares | Equity Incentive | ||||||||||||||||||||||||||
or Units of Stock | or Units of Stock | Equity Incentive Plan | Plan Awards: Market | |||||||||||||||||||||||||
That Have Not Vested (#) | That Have Not Vested ($) | Awards: Number of | or Payout value of | |||||||||||||||||||||||||
unearned units | unearned units | |||||||||||||||||||||||||||
Restricted | Restricted | Restricted | Restricted | that have not vested | that have not vested | |||||||||||||||||||||||
Name | Grant Date | Stock | Stock Units | Stock | Stock Units | (#) | ($) | |||||||||||||||||||||
Timothy R. Eller | 5/11/06 | 13,008 | 314,924 | |||||||||||||||||||||||||
5/17/07 | 42,444 | 1,027,569 | ||||||||||||||||||||||||||
Catherine R. Smith | 10/16/06 | 19,818 | 479,794 | |||||||||||||||||||||||||
5/10/07 | 8,236 | 199,394 | ||||||||||||||||||||||||||
5/17/07 | 20,161 | 488,098 | ||||||||||||||||||||||||||
10/26/07 | 76,628 | 1,855,164 | ||||||||||||||||||||||||||
David L. Barclay | 5/11/06 | 5,727 | 138,651 | |||||||||||||||||||||||||
5/10/07 | 8,236 | 199,394 | ||||||||||||||||||||||||||
5/17/07 | 31,833 | 770,677 | ||||||||||||||||||||||||||
Robert S. Stewart | 5/11/06 | 1,831 | 44,329 | |||||||||||||||||||||||||
5/10/07 | 5,490 | 132,913 | ||||||||||||||||||||||||||
5/17/07 | 11,672 | 282,579 | ||||||||||||||||||||||||||
Brian J. Woram | 5/11/06 | 1,831 | 44,329 | |||||||||||||||||||||||||
5/10/07 | 8,236 | 199,394 | ||||||||||||||||||||||||||
5/17/07 | 16,977 | 411,013 |
(1) | The restricted stock is forfeited if we cease to employ the holder before the vesting date. All shares of restricted stock vest immediately upon the holder’s death or disability or upon a change in control of Centex. Holders of restricted stock have the right to vote and receive dividends on the shares. The restricted stock vests in accordance with the vesting schedule below. |
Grant Date | Vesting Schedule | |
5/11/2006 | 331/3% per year on March 31, 2007, 2008 and 2009 | |
10/16/2006 | 20% per year beginning on the first anniversary of the date of grant | |
5/10/2007 | 331/3% per year beginning on the second anniversary of the date of grant | |
10/26/2007 | 25% per year beginning on the first anniversary of the date of grant |
(2) | The restricted stock units represent the right to receive on the payout date specified in the award (or a payment election) a number of shares of Centex common stock equal to the number of units awarded, subject to vesting requirements. The units do not entitle the recipients to receive dividends or to any other rights as a stockholder. The units vest in accordance with the vesting schedule below. |
Grant Date | Vesting Schedule | |
5/11/2006 | 331/3% per year on March 31, 2007, 2008 and 2009 | |
5/10/2007 | 331/3% per year beginning on the second anniversary of the date of grant |
(3) | The LTPU represents the right to receive on the payout date specified in the award an amount of cash, if any, equal to the number of units awarded, as adjusted by our relative performance on two business performance metrics, as described under “Long-Term Awards for Fiscal 2008” on page 54, times the share price of common stock at March 31, 2010. The award has a three-year cliff vesting expiring on March 31, 2010, but all or a portion may be paid out in accordance with the terms of the award upon the holder’s death, disability, retirement, termination not for cause, or upon a change of control. We estimated our performance on the performance metrics for the performance period to be 100% and used the March 31, 2008 closing price to estimate the payout value of the award. |
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Option Awards | Stock Awards | |||||||||||||||||||||||
Restricted Stock | Restricted Stock Units | |||||||||||||||||||||||
Number of | Value | Number of | Value | Number of | Value | |||||||||||||||||||
Shares Acquired | Realized | Shares Acquired | Realized | Shares Acquired | Realized | |||||||||||||||||||
Name | on Exercise (#) | on Exercise ($) (1) | on Vesting (#) | on Vesting ($) (2) | on Vesting (#) | on Vesting ($) (2) | ||||||||||||||||||
Timothy R. Eller | 762,808 | (3) | 6,283,385 | 75,963 | 2,142,827 | 222,200 | (4) | 5,379,462 | ||||||||||||||||
Catherine R. Smith | — | — | 4,954 | 126,822 | — | — | ||||||||||||||||||
David L. Barclay | 63,994 | 537,103 | — | — | 11,783 | (4) | 314,484 | |||||||||||||||||
Robert S. Stewart | 44,440 | (5) | 359,791 | 5,580 | 153,176 | — | — | |||||||||||||||||
Brian J. Woram | 59,550 | (6) | 524,077 | 1,831 | 44,329 | 2,715 | (4) | 78,819 |
(1) | Based on the difference between the market price of Centex common stock on the NYSE at the time of exercise of the option and the exercise price of the option. For Mr. Eller, Mr. Barclay and Mr. Woram, also includes cash bonuses of $1,590,019, $146,252 and $87,751, respectively, paid to them in fiscal 2008 (but awarded to them in 1998 as a tandem bonus to the stock option award) in connection with their exercise of stock options granted to them in 1998, as also reported in the All Other Compensation column of theSummary Compensation Table on page 60. No compensation decisions were made by our board or compensation committee on these option awards or the tandem bonus since their award in 1998. | |
(2) | Based on the closing sale price of Centex common stock on the NYSE on the vesting date. | |
(3) | An aggregate of 762,808 stock options were exercised in a “net exercise” in which the value relating to 608,098 shares were used to pay the exercise price and taxes, and a net of 154,710 shares were acquired. No cash was received. | |
(4) | The stock unit award for Mr. Eller vested in full on March 31, 2008 and was paid on April 1, 2008 in accordance with the terms of the award agreement dated May 14, 2003. The stock unit awards for Mr. Barclay and Mr. Woram vested in full during fiscal 2008, but Mr. Barclay made a payment election to receive payout of his award as follows: 6,055 units on April 4, 2008 and 5,728 units on April 1, 2009, and Mr. Woram made a payment election to receive payout of his award on April 1, 2008. | |
(5) | An aggregate of 44,440 stock options were exercised in a “net exercise” in which the value relating to 35,582 shares was used to pay the exercise price and taxes, and a net of 8,858 shares were acquired. No cash was received. | |
(6) | An aggregate of 56,550 stock options were exercised in a “net exercise” in which the value relating to 44,586 shares was used to pay the exercise price and taxes, and a net of 11,964 shares were acquired. No cash was received. In addition, Mr. Woram paid $51,980 to exercise and hold 3,000 shares from these options. |
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Executive Contributions | Registrant | Aggregate Balance | ||||||||||||||||||||||||||||||||||||||
in | Contributions in | Aggregate Earnings in | Aggregate Withdrawals/ | at | ||||||||||||||||||||||||||||||||||||
Last Fiscal Year ($) | Last Fiscal Year ($) | Last Fiscal Year ($) | Distributions ($) | Last Fiscal Year End ($) | ||||||||||||||||||||||||||||||||||||
Deferred | Deferred | Deferred | Deferred | |||||||||||||||||||||||||||||||||||||
Deferred | Cash | Cash | Cash | Cash | ||||||||||||||||||||||||||||||||||||
Cash | Compen- | Compen- | Compen- | Compen- | ||||||||||||||||||||||||||||||||||||
Compen- | sation | Sation | Sation | Sation | ||||||||||||||||||||||||||||||||||||
Name | sation | SERP | (1) | SERP (2) | (1)(3) | SERP (4) | (1)(5) | SERP | (1)(6) | SERP (7) | ||||||||||||||||||||||||||||||
Timothy R. Eller | — | — | — | 20,850 | 216,459 | (58,149 | ) | 1,285,390 | — | 3,593,902 | 745,673 | |||||||||||||||||||||||||||||
Catherine R. Smith | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
David L. Barclay | — | — | — | 5,963 | 65,193 | 958 | 773,035 | — | 1,116,761 | 81,577 | ||||||||||||||||||||||||||||||
Robert S. Stewart | — | — | — | 3,188 | 39,239 | (903 | ) | 385,817 | — | 378,815 | 45,811 | |||||||||||||||||||||||||||||
Brian J. Woram | — | — | — | 4,200 | 19,902 | (7,121 | ) | 164,301 | — | 334,499 | 75,101 |
(1) | Relates to deferred cash compensation awards subject to vesting requirements awarded in prior fiscal years under our Annual Plan or 2003 Equity Plan and deferred under our Executive Deferred Compensation Plan. A description of our executive deferred compensation plan is described under “Executive Deferred Compensation Plan” on page 72. | |
(2) | Represents our contributions accrued to the accounts of the named executive officers pursuant to our SERP. These contributions were accrued in May 2007 in respect of the 2006 calendar year. | |
(3) | Represents interest earned in fiscal 2008 on deferred cash compensation awards, and thus includes interest earned on awards granted prior to fiscal 2008. These amounts are also reported as compensation in the Non-Equity Incentive Plan Compensation column in theSummary Compensation Tableon page 60. | |
(4) | Represents earnings (losses) on the named executive officer’s account balances under our SERP. An executive may designate how his or her account balances are to be invested by selecting among the investment options available under our Saving for Retirement Plan. The table below shows the investment options available under the SERP (which, with the exception of the Centex Corporation Common Stock Fund, mirror the investment choices under the Saving for Retirement Plan). |
Fund Class | Measurement Fund | |
Asset Allocation Commingled Pools | Pyramis Index Lifecycle Commingled Pools (2000-2050)+ | |
Asset Allocation Commingled Pools | Strategy Funds* | |
Foreign Large Blend | Vanguard Total International Stock Index Fund — Investor Shares + | |
Foreign Large Growth | Fidelity Diversified International Fund * | |
Intermediate Term Bond | Fidelity U.S. Bond Index Fund | |
Large Blend | Fidelity Spartan® U.S. Equity Index Fund — Investor Class * | |
Large Blend | Vanguard Large-Cap Index Fund — Institutional Shares + | |
Large Blend | Vanguard Total Stock Market Index Fund | |
Large Growth | TCW Select Equities Fund — Class N * | |
Large Value | Sound Shore Fund * | |
Mid-Cap Blend | Fidelity Low-Priced Stock Fund * | |
Mid-Cap Blend | Fidelity Spartan® Extended Market Index Fund — Investor Class * | |
Mid-Cap Blend | Legg Mason Special Investment Trust — Class FI * | |
Mid-Cap Blend | Vanguard Mid-Cap Index Fund — Institutional Shares + | |
Small Blend | RS Partners Fund * | |
Small Blend | Vanguard Small-Cap Index Fund — Institutional Shares + |
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Fund Class | Measurement Fund | |
Small Growth | Roxbury Small Cap Growth Fund — Institutional Shares * | |
Stable Value Commingled Pool | Managed Income Portfolio | |
* | Fund no longer offered after March 2008. + Fund added in March 2008. | |
(5) | Represents payouts during fiscal 2008 to the named executive officer of vested amounts of deferred cash compensation. | |
(6) | Aggregate balance of the named executive officer’s deferred cash compensation account, including earnings. | |
(7) | Aggregate balance of the named executive officer’s SERP account, including earnings. |
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Termination of Employment ($) | Change in Control ($) | |||||||||||||||||||||||||||
Involuntary | Involuntary | |||||||||||||||||||||||||||
Not for Cause | Not for Cause | |||||||||||||||||||||||||||
Termination | Termination | |||||||||||||||||||||||||||
or Voluntary | No | or Voluntary | ||||||||||||||||||||||||||
Termination for | Termination | Termination for | ||||||||||||||||||||||||||
Payments and Benefits | Voluntary | Good Reason | For Cause | Death | Disability | of Employment | Good Reason | |||||||||||||||||||||
Short-term incentive compensation (bonus) (1) | — | — | — | — | — | 4,000,000 | 4,000,000 | |||||||||||||||||||||
Vesting of long-term awards: | ||||||||||||||||||||||||||||
Stock options (2) | — | — | — | — | — | — | — | |||||||||||||||||||||
Restricted stock | — | 314,924 | — | 314,924 | 314,924 | 314,924 | 314,924 | |||||||||||||||||||||
Stock units | — | — | — | — | — | — | — | |||||||||||||||||||||
Performance units (3) | 1,027,569 | 1,027,569 | — | 666,654 | 666,654 | 1,027,569 | 1,027,569 | |||||||||||||||||||||
Deferred cash | 1,063,353 | 1,063,353 | — | 1,063,353 | 1,063,353 | 1,063,353 | 1,063,353 | |||||||||||||||||||||
Vesting of SERP contributions | — | — | — | — | — | — | — | |||||||||||||||||||||
Cash severance payments | — | 9,840,000 | — | — | — | — | 5,840,000 | |||||||||||||||||||||
Salary continuation plan payments | — | — | — | 3,068,200 | — | — | — | |||||||||||||||||||||
Outplacement benefits | — | 30,000 | — | — | — | — | 30,000 | |||||||||||||||||||||
Tax gross-up payments | — | — | — | — | — | — | — | |||||||||||||||||||||
Total | 2,090,922 | 12,275,846 | — | 5,113,131 | 2,044,931 | 6,405,846 | 12,275,846 |
Termination of Employment ($) | Change in Control ($) | |||||||||||||||||||||||||||
Involuntary | Involuntary | |||||||||||||||||||||||||||
Not for Cause | Not for Cause | |||||||||||||||||||||||||||
Termination | Termination | |||||||||||||||||||||||||||
or Voluntary | No | or Voluntary | ||||||||||||||||||||||||||
Termination for | For | Termination | Termination for | |||||||||||||||||||||||||
Payments and Benefits | Voluntary | Good Reason | Cause | Death | Disability | of Employment | Good Reason | |||||||||||||||||||||
Short-term incentive compensation (bonus) (1) | (800,000 | ) | 492,188 | (800,000 | ) | 492,188 | 492,188 | 656,250 | 656,250 | |||||||||||||||||||
Vesting of long-term awards: | ||||||||||||||||||||||||||||
Stock options (2) | — | — | — | — | — | — | — | |||||||||||||||||||||
Restricted stock | — | 650,184 | — | 2,534,351 | 2,534,351 | 2,534,351 | 2,534,351 | |||||||||||||||||||||
Stock units | — | — | — | — | — | — | — | |||||||||||||||||||||
Performance units (3) | — | — | — | 316,646 | 316,646 | 488,098 | 488,098 | |||||||||||||||||||||
Deferred cash | — | — | — | — | — | — | — | |||||||||||||||||||||
Vesting of SERP contributions | — | — | — | — | — | — | — | |||||||||||||||||||||
Cash severance payments | — | 1,842,375 | — | — | — | — | 1,186,125 | |||||||||||||||||||||
Salary continuation plan payments | — | — | — | 6,126,120 | — | — | — | |||||||||||||||||||||
Outplacement benefits | — | 25,000 | — | — | — | — | 25,000 | |||||||||||||||||||||
Tax gross-up payments | — | — | — | — | — | — | — | |||||||||||||||||||||
Total | (800,000 | ) | 3,009,747 | (800,000 | ) | 9,469,305 | 3,343,185 | 3,678,699 | 4,889,824 |
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Termination of Employment ($) | Change in Control ($) | |||||||||||||||||||||||||||
Involuntary | Involuntary | |||||||||||||||||||||||||||
Not for Cause | Not for Cause | |||||||||||||||||||||||||||
Termination | Termination | |||||||||||||||||||||||||||
or Voluntary | No | or Voluntary | ||||||||||||||||||||||||||
Termination for | Termination | Termination for | ||||||||||||||||||||||||||
Payments and Benefits | Voluntary | Good Reason | For Cause | Death | Disability | of Employment | Good Reason | |||||||||||||||||||||
Short-term incentive compensation (bonus) (1) | 340,000 | 340,000 | — | 340,000 | 340,000 | 1,900,000 | 1,900,000 | |||||||||||||||||||||
Vesting of long-term awards: | ||||||||||||||||||||||||||||
Stock options (2) | — | — | — | — | — | — | — | |||||||||||||||||||||
Restricted stock | — | — | — | — | — | — | — | |||||||||||||||||||||
Stock units | — | 205,107 | — | 338,044 | 338,044 | 338,044 | 338,044 | |||||||||||||||||||||
Performance units (3) | — | — | — | 499,990 | 499,990 | 770,677 | 770,677 | |||||||||||||||||||||
Deferred cash | — | 499,502 | — | 499,502 | 499,502 | 499,502 | 499,502 | |||||||||||||||||||||
Vesting of SERP contributions | — | — | — | — | — | — | — | |||||||||||||||||||||
Cash severance payment | — | 3,562,500 | — | — | — | — | 1,662,500 | |||||||||||||||||||||
Salary continuation plan payments | — | — | — | 2,512,750 | — | — | — | |||||||||||||||||||||
Outplacement benefits | — | 25,000 | — | — | — | — | 25,000 | |||||||||||||||||||||
Tax gross-up payments | — | — | — | — | — | — | — | |||||||||||||||||||||
Total | 340,000 | 4,632,109 | — | 4,190,286 | 1,677,536 | 3,508,223 | 5,195,723 |
Termination of Employment ($) | Change in Control ($) | |||||||||||||||||||||||||||
Involuntary | Involuntary | |||||||||||||||||||||||||||
Not for Cause | Not for Cause | |||||||||||||||||||||||||||
Termination | Termination | |||||||||||||||||||||||||||
or Voluntary | No | or Voluntary | ||||||||||||||||||||||||||
Termination for | Termination | Termination for | ||||||||||||||||||||||||||
Payments and Benefits | Voluntary | Good Reason | For Cause | Death | Disability | of Employment | Good Reason | |||||||||||||||||||||
Short-term incentive compensation (bonus) (1) | 244,000 | 244,000 | — | 244,000 | 244,000 | 390,000 | 390,000 | |||||||||||||||||||||
Vesting of long-term awards: | ||||||||||||||||||||||||||||
Stock options (2) | — | — | — | — | — | — | — | |||||||||||||||||||||
Restricted stock | — | 88,633 | — | 177,241 | 177,241 | 177,241 | 177,241 | |||||||||||||||||||||
Stock units | — | — | — | — | — | — | — | |||||||||||||||||||||
Performance units (3) | — | — | — | 183,328 | 183,328 | 282,579 | 282,579 | |||||||||||||||||||||
Deferred cash | — | 149,717 | — | 149,717 | 149,717 | 149,717 | 149,717 | |||||||||||||||||||||
Vesting of SERP contributions | — | — | — | — | — | — | — | |||||||||||||||||||||
Cash severance payments | — | 1,170,000 | — | — | — | — | 780,000 | |||||||||||||||||||||
Salary continuation plan payments | — | — | — | 2,209,350 | — | — | — | |||||||||||||||||||||
Outplacement benefits | — | 25,000 | — | — | — | — | 25,000 | |||||||||||||||||||||
Tax gross-up payments | — | — | — | — | — | — | — | |||||||||||||||||||||
Total | 244,000 | 1,677,350 | — | 2,963,636 | 754,286 | 999,537 | 1,804,537 |
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Termination of Employment ($) | Change in Control ($) | |||||||||||||||||||||||||||
Involuntary | Involuntary | |||||||||||||||||||||||||||
Not for Cause | Not for Cause | |||||||||||||||||||||||||||
Termination | Termination | |||||||||||||||||||||||||||
or Voluntary | No | or Voluntary | ||||||||||||||||||||||||||
Termination for | Termination | Termination for | ||||||||||||||||||||||||||
Payments and Benefits | Voluntary | Good Reason | For Cause | Death | Disability | of Employment | Good Reason | |||||||||||||||||||||
Short-term incentive compensation (bonus) (1) | 352,000 | 352,000 | — | 352,000 | 352,000 | 562,500 | 562,500 | |||||||||||||||||||||
Vesting of long-term awards: | ||||||||||||||||||||||||||||
Stock options (2) | — | — | — | — | — | — | — | |||||||||||||||||||||
Restricted stock | — | 110,785 | — | 243,722 | 243,722 | 243,722 | 243,722 | |||||||||||||||||||||
Stock units | — | — | — | — | — | — | — | |||||||||||||||||||||
Performance units (3) | — | — | — | 266,652 | 266,652 | 411,013 | 411,013 | |||||||||||||||||||||
Deferred cash | — | 149,716 | — | 149,716 | 149,716 | 149,716 | 149,716 | |||||||||||||||||||||
Vesting of SERP contributions | — | — | — | — | — | — | — | |||||||||||||||||||||
Cash severance payments | — | 1,518,750 | — | — | — | — | 956,250 | |||||||||||||||||||||
Salary continuation plan payments | — | — | — | 4,124,250 | — | — | — | |||||||||||||||||||||
Outplacement benefits | — | 25,000 | — | — | — | — | 25,000 | |||||||||||||||||||||
Tax gross-up payments | — | — | — | — | — | — | — | |||||||||||||||||||||
Total | 352,000 | 2,156,251 | — | 5,136,340 | 1,012,090 | 1,366,951 | 2,348,201 |
(1) | For short-term incentive compensation payments upon a termination of employment that does not involve a change in control: | |
(a) for Mr. Eller, Mr. Barclay, Mr. Stewart and Mr. Woram, the payments shown are the dollar value of the incentive compensation each was awarded in fiscal 2008 under the applicable performance goals; and | ||
(b) for Ms. Smith, the payments shown are the amount of short-term incentive compensation guaranteed to her for fiscal 2008 ($492,188) less the portion of her starting cash award and starting bonus that is required to be repaid to Centex upon her voluntary or for cause termination ($800,000). | ||
(2) | The unvested stock options for each of the named executive officers have no intrinsic value because the share exercise price of the options is higher than the closing sale price of Centex common stock on March 31, 2008 ($24.21). | |
(3) | In cases where the long term performance award is paid out based on our estimated performance on the performance metrics, we have assumed a 100% performance factor. |
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and Voluntary Termination for Good
Reason (with no Change in Control)
• | a lump-sum severance payment equal to the sum of the executive’s annual base salary and annual target cash bonus multiplied by a factor that is determined by the executive’s position; | ||
• | acceleration of the vesting of a portion of the executive’s unvested equity (i.e., stock options, restricted stock, stock units and any performance share or similar security) and deferred cash compensation awards; and | ||
• | limited outplacement benefits. |
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Termination of Employment)
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Change in | ||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||
Non-Equity | Nonqualified | |||||||||||||||||||||||||||
Fees | Incentive Plan | Deferred | All Other | |||||||||||||||||||||||||
Earned or | Stock Awards | Option Awards | Compensation | Compensation | Compensation | |||||||||||||||||||||||
Name | Paid in Cash ($) | ($) (1)(2)(3) | ($) (4)(5)(6) | ($) | Earnings ($) | ($) (7)(8) | Total ($) | |||||||||||||||||||||
Barbara T. Alexander | 103,333 | (9) | 97,273 | 100,000 | — | — | 917 | 301,523 | ||||||||||||||||||||
Juan L. Elek (10) | 116,667 | (9) | 97,273 | 100,000 | — | — | 1,237 | 315,177 | ||||||||||||||||||||
Ursula O. Fairbairn | 103,333 | (11) | 91,682 | 100,000 | — | — | 857 | 295,872 | ||||||||||||||||||||
Thomas J. Falk | 126,666 | (12)(13) | 97,273 | 100,000 | — | — | 917 | 324,856 | ||||||||||||||||||||
Clint W. Murchison, III | 100,000 | 97,273 | 100,000 | — | — | 239,421 | 536,694 | |||||||||||||||||||||
Frederic M. Poses | 129,167 | (13) | 97,273 | 100,000 | — | — | 1,237 | 327,677 | ||||||||||||||||||||
James J. Postl | 104,167 | (12) | 96,923 | 100,000 | — | — | 917 | 302,007 | ||||||||||||||||||||
David W. Quinn | 100,000 | 97,273 | 100,000 | — | — | 925,112 | 1,222,385 | |||||||||||||||||||||
Matthew K. Rose | 100,000 | 58,342 | 100,000 | — | — | 647 | 258,989 | |||||||||||||||||||||
Thomas M. Schoewe | 116,667 | (11) | 97,273 | 100,000 | — | — | 917 | 314,857 |
(1) | Represents the dollar amount recognized for financial statement reporting purposes for fiscal 2008 in accordance with FAS 123R of restricted stock awards, and thus includes amounts for awards granted in and/or prior to fiscal 2008. Assumptions used in the calculation of these amounts are included in footnote (K) to our audited financial statements for fiscal 2008 included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2008. Mr. Rose’s stock award amount is less than the other directors because his first restricted stock award was received in July 2006 when he was elected. | |
(2) | Each director received a grant of restricted stock in fiscal 2008. The grant was made in July 2007 at the beginning of the board year. The award was made on July 27, 2007 in accordance with our policy regarding the grant of equity awards, which is described on page 67. The grant date fair value of the award computed in accordance with FAS 123R was approximately $100,000. | |
(3) | The directors held the following amounts of restricted Centex common stock at March 31, 2008: Ms. Alexander — 6,006 shares; Mr. Elek — 8,006 shares; Ms. Fairbairn — 6,006 shares; Mr. Falk — 6,006 shares; Mr. Murchison — 6,006 shares; Mr. Poses — 8,006 shares; Mr. Postl — 6,006 shares; Mr. Quinn — 6,006 shares; Mr. Rose — 4,690 shares; and Mr. Schoewe — 6,006 shares. We provide complete beneficial ownership information of Centex stock for each of our directors in theBeneficial Ownershiptable on page 41. | |
(4) | The annual stock option grants to the non-employee directors are made in July for service on the board during the immediately preceding 12-month period. The amounts in this column represent the dollar amount recognized for financial statement reporting purposes for fiscal 2008 in accordance with FAS 123R of stock option awards. This dollar amount represents the expense for the period April 1, 2007 to March 31, 2008 of the stock options to be granted in July 2008 as compensation for service on the board for the period July 2007 to July 2008 and does not include amounts for stock options granted with respect to any periods prior to fiscal 2008. | |
(5) | Each director received a stock option grant in fiscal 2008. The grant was made on July 27, 2007 at the end of the prior board year and in accordance with our policy regarding the grant of equity awards, which is described on page 67. The grant date fair value of the award computed in accordance with FAS 123R was approximately $100,000. | |
(6) | The directors held stock options for the following amounts of Centex common stock at March 31, 2008: Ms. Alexander — 51,177 shares; Mr. Elek — 28,501 shares; Ms. Fairbairn — 11,798 shares; Mr. Falk — 18,098 shares; Mr. Murchison — 109,420 shares (which include options for 64,216 shares held by his family limited partnership); Mr. Poses — 28,421 shares; Mr. Postl — 16,058 shares; Mr. Quinn — 98,659 shares; Mr. Rose — 6,822 shares; and Mr. Schoewe — 24,001 shares. We provide complete beneficial ownership information of Centex stock for each of our directors in theBeneficial Ownershiptable on page 41. | |
(7) | Includes cash dividends received by the directors in fiscal 2008 on their Centex restricted stock. For Mr. Murchison, also includes a cash bonus of $238,504 paid to his family limited partnership in fiscal 2008 (but awarded to him in 1998 as a tandem bonus to the stock option award) in connection with his exercise of stock options granted to him in 1998, to which the option had been assigned in December 2004. For Mr. Quinn, also includes an aggregate cash bonus of $924,195 paid to him in fiscal 2008 (but awarded to him in 1998 as a tandem bonus to the stock option award) in connection with his |
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exercise of stock options granted to him in 1998, while he was an officer of Centex. No compensation decisions were made by our board or compensation committee on these option awards or the tandem bonus since their award in 1998. | ||
(8) | Perquisites and other personal benefits are not disclosed for the directors because Centex’s aggregate incremental cost of the perquisites and benefits for each of the directors is less than $10,000. We used the same methodology for determining incremental cost as we did for the calculation of perquisites for the named executive officers in theSummary Compensation Table on page 60. | |
(9) | Includes fees for chairing the governance committee for a portion of the fiscal year. | |
(10) | Mr. Elek has decided to retire from the board at the annual meeting and, therefore, will not stand for reelection to the board. | |
(11) | Includes fees for chairing the compensation committee for a portion of the fiscal year. | |
(12) | Includes fees for chairing the audit committee for a portion of the fiscal year. | |
(13) | Includes fees for serving as lead director for a portion of the fiscal year. |
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• | Any employment relationship or transaction involving any of our executive officers and any related compensation or benefits solely resulting from that employment relationship or transaction. | |
• | Any compensation or benefits payable to a Centex director solely for service as a director. | |
• | Any transaction in which the interest of the related person arises solely from the ownership of a class of Centex equity securities and all holders of that class of equity securities received the same benefit on a pro rata basis. | |
• | The following items of indebtedness: amounts due from the related person for purchases of goods and services subject to usual trade terms, for ordinary business travel and expense payments, and for other transactions in the ordinary course of business. |
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Vice President, Deputy General Counsel
and Secretary
June ___, 2008
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1. | Structure of Board |
2. | Director Selection and Qualifications |
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3. | Director Independence |
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4. | Related Person Transactions |
5. | Stockholder Nominations |
6. | Director Resignation |
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7. | Director Responsibilities |
• | Selection, compensation and evaluation of the Chief Executive Officer and oversight of succession planning. | |
• | Assurance that processes are in place to promote compliance with law and high standards of business ethics. | |
• | Oversight of Centex’s strategic planning. | |
• | Approval of all material transactions and financings. | |
• | Understanding Centex’s financial statements and other disclosures and evaluating and changing where necessary the process for producing accurate and complete reporting. |
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• | Using its experience to advise management on major issues facing Centex. | |
• | Evaluating the performance of the Board and its committees and making appropriate changes where necessary. |
• | make recommendations to the Board regarding the structure of Board meetings | |
• | recommend matters for consideration by the Board | |
• | determine appropriate materials to be provided to the directors | |
• | serve as an independent point of contact for stockholders wishing to communicate with the Board other than through the Chairman | |
• | assign tasks to the appropriate committees | |
• | with the approval of the Corporate Governance and Nominating Committee, oversee the annual evaluation of the Board and its Committees. |
8. | Director Access to Management and Independent Advisors |
9. | Non-Employee Director Compensation |
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10. | Director Orientation and Continuing Education |
11. | Evaluation of the Board and its Committees |
12. | Management Compensation, Evaluation and Succession |
13. | Stock Ownership Guidelines |
Title of Officer | Multiple | |||||||
Centex Corporation | Centex Homes | |||||||
Chief Executive Officer | 5x | |||||||
Chief Operating Officer | Chief Executive Officer | 4x | ||||||
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Title of Officer | Multiple | |||||||
Centex Corporation | Centex Homes | |||||||
Chief Financial Officer; Executive Vice President and Senior Vice President reporting to CEO or COO | Region Presidents; Executive Vice President, Operations Support | 3x | ||||||
Executive Vice President not reporting to the CEO or COO | 2x | |||||||
Senior Vice President not reporting to the CEO or COO | 1.5x | |||||||
14. | Evaluation of Corporate Governance Guidelines |
15. | Stockholder Ratification of Independent Auditors |
16. | Stockholder Proposals |
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17. | Stockholder Communications with the Board |
18. | Policy on Recoupment in Restatement Situations |
19. | Code of Ethics |
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1 | On February 4, 1998 the stockholders voted to increase the number of authorized shares from 55,000,000 to 105,000,000, with 5,000,000 shares of preferred stock and 100,000,000 shares of common stock. When the Certificate of Amendment was filed on February 12, 1998, it purported to amend all of Article Fourth instead of merely the first paragraph thereof containing the authorized shares. The scriveners error was corrected in a Certificate of Correction filed November 6, 1998. On February 25, 2004 the stockholders voted to increase the number of authorized shares from 105,000,000 to 305,000,000, with 5,000,000 shares of preferred stock and 300,000,000 shares of common stock. When the Certificate of Amendment was filed on February 24, 2004, it purported to amend all of Article Fourth instead of merely the first paragraph thereof containing the authorized shares. The scriveners error was corrected in a Certificate of Correction filed November 14, 2007. |
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Dallas, Texas 75201 | ||
Dallas, Texas 75201 | ||
Dallas, Texas 75201 |
Reno, Nevada 89502 | ||||
Reno, Nevada 89503 | ||||
Reno, Nevada 89502 |
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James R. Peacock III | ||||
Vice President, Deputy General Counsel and Secretary | ||||
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(PURSUANT TO NRS 78.385 AND 78.390)
USE BLACK INK ONLY - DO NOT HIGHLIGHT | ABOVE SPACE IS FOR OFFICE USE ONLY |
For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
4. Effective date of filing (optional): | ||||
(must not be later than 90 days after the certificate is filed) | ||||
5. Officer Signature(Required): | X | |||
This form must be accompanied by appropriate fees. | Nevada Secretary of State AM 78.385 Amend 2007 | |
Revised on 01/01/07 |
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Subject to Stockholder Approval
(Proposal No. 4)
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Stockholder Approval (Proposal No. 5)
Stockholder Approval (Proposal No. 6)
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to the
Centex Corporation 2003 Equity Incentive Plan
(Amended and Restated Effective January 1, 2008)
1. | If an optionee shall voluntarily terminate employment and at such time he or she is age 55 or older, has at least 10 Years of Service and the sum of age and Years of Service equals at least 70, then all non-qualified options held by him or her shall immediately vest upon the termination of employment (“Vested Retirement”). | ||
2. | All rights to exercise such vested options will terminate 12 months following the date of such Vested Retirement. However, to the extent that an option agreement provides a longer time to exercise following voluntary termination of employment, then such agreement will control. | ||
3. | As used herein: “Full Time Employee” means a person actively and regularly engaged in work at least 40 hours a week; and “Years of Service” means an optionee’s years of employment with Centex Corporation or any of its Affiliates. An optionee shall be credited with a Year of Service on each anniversary of the date on which he or she was first employed by Centex Corporation or its Affiliate, provided that the optionee continues to be employed by such employer on such anniversary date. | ||
4. | The stock plans covered are: |
• | Centex Corporation Amended and Restated 1987 Stock Option Plan | ||
• | Seventh Amended and Restated 1998 Centex Corporation Employee Non-Qualified Stock Option Plan | ||
• | Amended and Restated Centex Corporation 2001 Stock Plan | ||
• | Amended and Restated Centex Corporation 2003 Equity Incentive Plan |
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