Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrantþ
Filed by a Party other than the Registranto
Check the appropriate box:
o | Preliminary Proxy Statement |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
þ | Definitive Proxy Statement |
o | Definitive Additional Materials |
o | Soliciting Material Pursuant to §240.14a-12 |
KB Home
Payment of Filing Fee (Check the appropriate box):
þ | No fee required. | |||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
1) | Title of each class of securities to which transaction applies: |
2) | Aggregate number of securities to which transaction applies: |
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
4) | Proposed maximum aggregate value of transaction: |
5) | Total fee paid: |
o | Fee paid previously with preliminary materials. | |||
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
1) | Amount Previously Paid: |
2) | Form, Schedule or Registration Statement No.: |
3) | Filing Party: |
4) | Date Filed: |
Table of Contents
Table of Contents
Table of Contents
1
Table of Contents
2
Table of Contents
• | directors must possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the Company’s stockholders, |
• | all directors are expected to be financially literate, |
• | no more than one employee of the Company may serve on the Board at any given time, and |
• | consultants, lawyers or bankers who do a significant amount of business with the Company are ineligible to serve as a director. |
• | the director or an immediate family member of the director received more than $100,000 in direct compensation from KB Home or any subsidiary, or joint venture or partnership with KB Home, other than fees directly related to service on KB Home’s Board or on the Board of Kaufman & Broad S.A., the Company’s publicly-held French subsidiary, |
• | the director was employed by or affiliated with KB Home’s principal independent auditors, |
• | an immediate family member of the director was employed by KB Home as an executive officer or by KB Home’s principal independent auditors in a professional capacity, |
3
Table of Contents
• | an executive officer of KB Home was on the compensation committee of the board of directors of a company which employed the director, or which employed an immediate family member of the director as an officer, or |
• | the director was an executive officer or employee of, or an immediate family member of the director was an executive officer of, another company that does business with KB Home and the annual revenues derived from that business by either company accounts for more than (a) $1,000,000 or (b) two percent (2%) of the consolidated gross annual revenues of such company, whichever is greater. |
• | the director is an executive officer of another company that does business with KB Home, provided the annual revenues derived from that business by either company accounts for less than (a) $1,000,000 or (b) two percent (2%) of the consolidated gross annual revenues of such company, whichever is greater, or |
• | the director serves as an officer, director or trustee of a charitable organization, and KB Home makes discretionary charitable contributions to that organization, provided such contributions are less than the greater of (a) $100,000 or (b) two percent (2%) of that organization’s total annual charitable receipts. |
4
Table of Contents
Management | Nominating and | ||||||||||||||||
Audit and | Development and | Corporate | |||||||||||||||
Name of Director | Compliance | Compensation | Governance | Executive | |||||||||||||
Independent Directors | |||||||||||||||||
Ronald W. Burkle | X | X | |||||||||||||||
Dr. Ray R. Irani | X* | X* | |||||||||||||||
Kenneth M. Jastrow, II | X | ||||||||||||||||
James A. Johnson(a) | X | X*† | |||||||||||||||
J. Terrence Lanni(b) | X | X | |||||||||||||||
Melissa Lora(c) | X | ||||||||||||||||
Michael G. McCaffery(d) | X | X | |||||||||||||||
Leslie Moonves(e) | X | ||||||||||||||||
Dr. Barry Munitz | X* | X | |||||||||||||||
Luis G. Nogales(f) | X | X | X | ||||||||||||||
Employee Director | |||||||||||||||||
Bruce Karatz | X | ||||||||||||||||
Number of Meetings in Fiscal 2004 | 9 | 3 | 4 | 0 | |||||||||||||
X = Member * = Chair † = Presiding Director |
(a) | Mr. Johnson’s first meeting as a member of the Management Development and Compensation Committee was on July 1, 2004. |
(b) | Mr. Lanni’s first meeting as a member of the Nominating and Corporate Governance Committee was on July 1, 2004. |
(c) | Ms. Lora’s first meeting as a member of the Audit and Compliance Committee was on July 1, 2004. |
(d) | Mr. McCaffery’s first meeting as a member of the Nominating and Corporate Governance Committee was on July 1, 2004. |
(e) | Mr. Moonves’ first meeting as a member of the Management Development and Compensation Committee was on July 1, 2004. |
(f) | Mr. Nogales’ first meeting as a member of the Audit and Compliance Committee was on July 1, 2004. Mr. Nogales served on the Nominating and Corporate Governance Committee until April 1, 2004. |
5
Table of Contents
6
Table of Contents
Corporate Secretary | |
KB Home | |
10990 Wilshire Boulevard | |
Los Angeles, California 90024 |
7
Table of Contents
8
Table of Contents
9
Table of Contents
10
Table of Contents
11
Table of Contents
12
Table of Contents
13
Table of Contents
14
Table of Contents
15
Table of Contents
16
Table of Contents
RESOLVED, that the Amended Certificate of Incorporation of the Corporation be amended to increase the authorized Common Stock and for this purpose Paragraph (a) of Article Fourth thereof shall be struck out in its entirety and shall be replaced with the following new Paragraph (a) of Article Fourth: | |
FOURTH: (a) The total number of shares of stock which the Corporation shall have authority to issue is 335,000,000, consisting of 300,000,000 shares of Common Stock, par value $1.00 per share (the “Common Stock”), 25,000,000 shares of Special Common Stock, par value $1.00 per share (the “Special Common Stock”) and 10,000,000 shares of Preferred Stock, par value $1.00 per share (the “Preferred Stock”). |
17
Table of Contents
18
Table of Contents
19
Table of Contents
Amount and Nature of | ||||
Name of Beneficial Owner | Beneficial Ownership(a – d) | |||
Ronald W. Burkle | 66,933 | |||
Dr. Ray R. Irani | 53,690 | |||
Kenneth M. Jastrow, II | 9,839 | |||
James A. Johnson | 80,816 | |||
Bruce Karatz | 2,154,841 | |||
J. Terrence Lanni | 14,179 | |||
Melissa Lora | 4,197 | |||
Michael G. McCaffery | 4,503 | |||
Leslie Moonves | 3,197 | |||
Dr. Barry Munitz | 14,000 | |||
Luis G. Nogales | 24,446 | |||
Jeffrey T. Mezger | 840,716 | |||
Robert Freed | 48,974 | |||
Jay Moss | 81,944 | |||
Leah S. W. Bryant | 80,915 | |||
All directors, Named Executive Officers and other executive officers as a group (25 people) | 4,132,774 | |||
(a) | Included are Stock Units held by non-employee directors under the Non-Employee Directors Stock Plan in the following amounts: Mr. Burkle 16,660; Dr. Irani 22,876; Mr. Jastrow 9,839; Mr. Johnson 22,272; Mr. Lanni 4,179; Ms. Lora 3,197; Mr. McCaffery 4,503; Mr. Moonves 3,197; Dr. Munitz 12,000; and Mr. Nogales 19,681. |
(b) | Included are shares of Common Stock subject to acquisition within 60 days of February 14, 2005 through the exercise of stock options granted under the Company’s employee stock plans in the following amounts: Mr. Karatz 1,312,392; Mr. Mezger 678,612; Mr. Moss 26,267; and Ms. Bryant |
20
Table of Contents
44,135; and all executive officers as a group, 2,472,220. Also included are shares subject to acquisition within 60 days of February 14, 2005 through the exercise of options under the Non-Employee Directors Stock Plan in the following amounts: Mr. Burkle 49,773; Dr. Irani 18,814; Mr. Johnson 56,544; and Mr. Nogales 1,065. |
(c) | Included are a total of 961,617 shares of restricted Common Stock granted under the Company’s employee stock plans. As of February 14, 2005, Mr. Karatz held 12,500 shares of restricted Common Stock under a grant made in 1991. These shares were part of a 150,000 share grant that vests in equal annual installments over twelve years. The first installment vested in 1994; full vesting will occur in 2005. In addition, for 2004, Mr. Karatz received an award of 116,844 shares of restricted Common Stock; the shares vest on January 15, 2007, three years from the date of grant. In accordance with his current employment agreement, which places a $5,000,000 limit on his cash incentive bonus, these shares represent the portion of his 2004 incentive bonus that was in excess of $5,000,000. Also, in 2004, all executive officers, including the Named Executive Officers, received restricted stock grants as part of their equity incentive awards for fiscal 2005. These shares vest on October 22, 2007, and were awarded in the following amounts: Mr. Karatz 30,000; Mr. Mezger 9,500; Mr. Freed 1,250; Mr. Moss 1,250; and Ms. Bryant 1,250; and all executive officers as a group, 54,700. In January 2005, certain executive officers received restricted stock for that portion of their annual incentive bonus that exceeded a specified amount. These shares vest on January 14, 2008, and were awarded to the Named Executive Officers in the following amounts: Mr. Karatz 107,397; Mr. Mezger 25,575; Mr. Freed 9,253; Mr. Moss 16,151; and Ms. Bryant 7,362; and all executive officers as a group, 167,200. |
(d) | Included are beneficially owned shares of Common Stock held in certain trusts as follows: Mr. Karatz holds all of the Common Stock he beneficially owns in a trust of which he is the sole trustee and sole beneficiary and over which he exercises sole voting and investment power; Ms. Lora holds 1,000 shares of Common Stock in a trust in which she and her spouse are trustees and sole beneficiaries and over which they exercise sole voting and investment power; Mr. Moss holds all of the Common Stock he beneficially owns in a trust of which he is the sole trustee and sole beneficiary and over which he exercises sole voting and investment power; Ms. Bryant holds 24,571 shares of beneficially owned Common Stock in a trust in which she is the sole trustee and sole beneficiary and over which she exercises sole voting and investment power. |
21
Table of Contents
Amount and Nature | Percent | ||||||||
of Beneficial | of | ||||||||
Name and Address of Beneficial Owner | Ownership (a – c) | Class | |||||||
KB Home Grantor Stock Trust, | 7,360,500 | 15.4 | % | ||||||
Wachovia Bank, N.A., as Trustee, | |||||||||
Institutional Trust and Retirement Services | |||||||||
101 North Main Street | |||||||||
Winston-Salem, North Carolina 27150 | |||||||||
FMR Corp. | 3,644,603 | 7.9 | % | ||||||
82 Devonshire Street | |||||||||
Boston, Massachusetts 02109 |
(a) | Pursuant to the amendment to Schedule 13D dated February 17, 2005 filed with the Securities and Exchange Commission by the KB Home Grantor Stock Trust, Wachovia Bank, N.A., as Trustee (the “GST”), the GST holds all of the shares reported pursuant to a trust agreement creating the GST in connection with the prefunding of certain obligations of the Company under various employee benefit plans. Both the GST and the Trustee disclaim beneficial ownership of the shares reported. The Trustee has no discretion over the manner in which the shares held by the GST are voted. The trust agreement for the GST provides that, as of any given record date, employees who hold unexercised options under the Company’s employee stock option plans will determine the manner in which shares of the Company’s Common Stock held in the GST are voted. |
The Trustee will vote the Common Stock held in the GST in the manner directed by those eligible employees who submit voting instructions for the shares. The number of shares as to which any one employee can direct the vote is determined on a pro-rata basis and will depend upon how many employees submit voting instructions to the Trustee. Employees who are also directors of the Company are excluded from voting; accordingly, Mr. Karatz may not direct the vote of any shares in the GST. If all eligible employees submit voting instructions to the Trustee, as of the February 14, 2005 record date for the Annual Meeting, the other Named Executive Officers will have the right to vote the following share amounts: Mr. Mezger 919,944; Mr. Freed 30,366; Mr. Moss 56,633; Ms. Bryant 84,900; and all executive officers as a group, 1,727,916. If less than all of the eligible employees submit voting instructions, then the foregoing amounts will be higher. The trust agreement further provides that all voting instructions received by the Trustee will be held in confidence and will not be disclosed to any person, including the Company. |
(b) | Pursuant to the amendment to Schedule 13G dated February 14, 2005 filed with the Securities and Exchange Commission by FMR Corp., 2,281,990 of the shares reported are beneficially owned by Fidelity Management & Research Company, an investment adviser and a wholly-owned subsidiary of |
22
Table of Contents
FMR Corp., as a result of acting as investment adviser to various investment companies (collectively, the “Fidelity Funds”); with respect to these shares, FMR Corp., Mr. Edward C. Johnson 3d and each of the Fidelity Funds exercise sole investment power and the Fidelity Funds’ Boards of Trustees exercises sole voting power. Of the shares reported, 376,023 shares are beneficially owned by Fidelity Management Trust Company, a bank and a wholly-owned subsidiary of FMR Corp., as to which each of Mr. Johnson and FMR Corp., through its control of Fidelity Management Trust Company, has sole investment and voting power. The remaining 986,590 shares reported are beneficially owned by Fidelity International Limited, an investment adviser and an entity independent of FMR Corp., as to which shares Fidelity International Limited exercises sole investment and voting power. Based on the number of shares outstanding as of February 14, 2005, the percent of class that may be deemed to be beneficially owned by FMR Corp. is approximately 7.6%. |
23
Table of Contents
• | closely link executive compensation to the creation of stockholder value, |
• | encourage stock ownership by executives to directly align executive interests with stockholder interests, |
• | reward contributions that further the Company’s KBnxt operational business model (as described in our 2004 Annual Report to Stockholders) by aligning individual performance measures with the Company’s performance objectives, |
• | balance compensation elements to encourage the achievement of both short-term business plans and long-term strategic objectives with a focus ontotalcompensation, and |
• | attract, retain and motivate executives of the highest quality. |
24
Table of Contents
25
Table of Contents
26
Table of Contents
• | Under the terms of his employment agreement, the maximum cash value of Mr. Karatz’s annual incentive is capped at a predetermined amount. For fiscal 2004, the Committee implemented similar cash value caps for Regional General Managers, Division Presidents, and certain Corporate Executives. Maximum cash values for annual incentive awards were set at $1,250,000 for Regional General Managers and $750,000 for Division Presidents. Amounts earned in excess of the cash cap were paid in restricted stock. |
• | Stock option award practices were modified for all executive officers and certain other senior executives in the most recent fiscal year. When determining award levels, the present value of the award is reviewed for each recipient. As a means to enhance executive retention, approximately 30% of the value of the overall equity award was granted in restricted stock. |
27
Table of Contents
28
Table of Contents
1999 | 2000 | 2001 | 2002 | 2003 | 2004 | |||||||||||||||||||
KB Home | 100 | 144 | 155 | 208 | 322 | 417 | ||||||||||||||||||
S&P Homebuilding Index | 100 | 155 | 177 | 213 | 420 | 484 | ||||||||||||||||||
Dow Jones Home Construction Index | 100 | 157 | 201 | 237 | 462 | 526 | ||||||||||||||||||
S&P 500 Index | 100 | 96 | 84 | 70 | 81 | 91 |
(a) | Total return assumes $100 invested at market close on November 30, 1999 in the Company, the S&P 500 Index, the S&P Homebuilding Index, and the Dow Jones Home Construction Index including reinvestment of dividends. |
29
Table of Contents
(b) | The three companies that comprise the S&P Homebuilding Index are: Centex Corporation, Pulte Homes, Inc. and the Company. The thirteen companies that comprise the Dow Jones Home Construction Index are: Beazer Homes, Centex Corporation, Champion Enterprises, Inc., D.R. Horton, Inc., Hovnanian Enterprises, Lennar Corporation, MDC Holdings, Inc., NVR, Inc., Pulte Homes, Inc., Ryland Group, Inc., Standard Pacific Corporation, Toll Brothers, Inc. and the Company. |
30
Table of Contents
• | in the event his employment is terminated as a result of his death or disability, an amount equal to two times Mr. Karatz’s average annual compensation for the three fiscal years prior to the date of the termination of his employment, |
• | in the event his employment is terminated as a result of an involuntary termination of his |
31
Table of Contents
employment by the Company without cause or his voluntary termination for good reason, an amount equal to three times his average annual compensation for the three fiscal years prior to the date of the termination of his employment, and | |
• | in the event his employment is terminated within 18 months following a “change of ownership” of the Company, an amount equal to three times his average annual compensation for the three fiscal years prior to the date of the termination of his employment. If, in such event, Mr. Karatz is subject to an excise tax under Section 4999 of the Internal Revenue Code with respect to the payments or distributions in the nature of compensation made to him by the Company in connection with a change in ownership of the Company, an additional amount so as to place him in the same after-tax position he would have been in had the excise tax not applied. |
32
Table of Contents
33
Table of Contents
34
Table of Contents
35
Table of Contents
Long-Term Compensation | |||||||||||||||||||||||||||||||||
Awards | Payouts | ||||||||||||||||||||||||||||||||
Annual Compensation | |||||||||||||||||||||||||||||||||
Securities | |||||||||||||||||||||||||||||||||
Other Annual | Restricted | Underlying | LTIP | All Other | |||||||||||||||||||||||||||||
Fiscal | Bonus | Compensation | Stock | Options/ | Payouts | Compensation | |||||||||||||||||||||||||||
Name and Position | Year | Salary($) | ($)(a) | ($)(b) | Awards($) | SARs(#) | ($)(c) | ($)(d) | |||||||||||||||||||||||||
Bruce Karatz | |||||||||||||||||||||||||||||||||
Chairman and | 2004 | $ | 1,000,000 | $ | 5,000,000 | $ | 165,263 | $ | 14,045,340 | 280,000 | $ | 3,865,455 | $ | 101,528 | |||||||||||||||||||
Chief Executive | 2003 | 994,667 | 5,000,000 | —0— | 9,995,580 | 280,000 | 2,432,478 | 95,995 | |||||||||||||||||||||||||
Officer | 2002 | 921,000 | 7,755,970 | —0— | 6,023,880 | 500,000 | 1,803,678 | 95,556 | |||||||||||||||||||||||||
Jeffrey T. Mezger | |||||||||||||||||||||||||||||||||
Executive Vice | 2004 | 478,333 | 2,000,000 | —0— | 3,524,962 | 100,000 | 2,761,071 | 28,800 | |||||||||||||||||||||||||
President and | 2003 | 458,333 | 2,000,000 | —0— | 2,473,948 | 112,000 | 1,737,475 | 27,500 | |||||||||||||||||||||||||
Chief Operating | 2002 | 431,000 | 3,766,789 | —0— | —0— | 273,303 | 1,503,072 | 25,100 | |||||||||||||||||||||||||
Officer | |||||||||||||||||||||||||||||||||
Jay Moss | |||||||||||||||||||||||||||||||||
Regional General | 2004 | 259,167 | 1,250,000 | —0— | 1,862,689 | 12,500 | 1,380,426 | 15,600 | |||||||||||||||||||||||||
Manager | 2003 | 249,167 | 1,449,165 | —0— | 662,132 | 16,800 | 868,806 | 14,450 | |||||||||||||||||||||||||
�� | 2002 | 240,000 | 1,134,207 | —0— | —0— | 36,828 | 681,367 | 14,400 | |||||||||||||||||||||||||
Robert Freed | |||||||||||||||||||||||||||||||||
Regional General | 2004 | 229,167 | 1,250,000 | —0— | 1,107,985 | 12,500 | 1,380,426 | 13,800 | |||||||||||||||||||||||||
Manager | 2003 | 219,167 | 1,774,697 | —0— | 968,435 | 16,800 | 868,806 | 550 | |||||||||||||||||||||||||
2002 | 205,000 | 2,078,159 | —0— | —0— | 53,918 | 730,880 | 500 | ||||||||||||||||||||||||||
Leah S.W. Bryant | |||||||||||||||||||||||||||||||||
Regional General | 2004 | 269,167 | 1,250,000 | —0— | 901,057 | 12,500 | 1,104,494 | 16,013 | |||||||||||||||||||||||||
Manager | 2003 | 232,500 | 1,250,000 | —0— | 637,049 | 32,400 | 521,270 | 13,950 | |||||||||||||||||||||||||
2002 | 218,077 | 1,319,888 | —0— | —0— | 20,000 | 150,303 | 13,140 | ||||||||||||||||||||||||||
(a) | The 2004 bonus reported for Mr. Karatz is comprised of the cash portion of his annual incentive bonus. Mr. Karatz’s annual incentive bonus is determined by a performance-based formula set forth in his employment agreement. The formula requires, among other things, that any amount earned over $5,000,000 must be paid in shares of three-year restricted stock. Accordingly, in 2004, $5,000,000 of Mr. Karatz’s incentive bonus was paid in cash, and $11,750,000 was paid in 107,397 shares of restricted stock and is reported separately in the table above under “Restricted Stock Awards.” The amount of shares of restricted stock issued to Mr. Karatz was determined by reference to the closing price of the Company’s Common Stock on the New York Stock Exchange on the date of grant (January 14, 2005). Please see “Employment Agreements” on pages 31-32 for a description of the performance-based incentive compensation formula in Mr. Karatz’s employment agreement. The remaining $2,295,340 of the restricted stock awards reported for Mr. Karatz in 2004 is a grant of 30,000 shares of Common Stock made on October 22, 2004 as part of |
36
Table of Contents
Mr. Karatz’s 2005 equity incentive award, the value reported determined by reference to the closing price of the Company’s Common Stock on the New York Stock Exchange on the date of grant. | ||
Restricted stock grants reported for Messrs. Mezger, Moss and Freed and Ms. Bryant include the restricted Common Stock portion of their 2005 equity incentive awards, granted on October 22, 2004, as follows: Mr. Mezger 9,500; Mr. Moss 1,250; Mr. Freed 1,250; and Ms. Bryant 1,250. In addition, in 2004 certain limits were placed on the amount of annual incentive awards for certain senior executives that may be paid in cash. Accordingly, as a result of these caps, on January 14, 2005, the Named Executive Officers received restricted stock awards in the following amounts: Mr. Karatz 107,397; Mr. Mezger 25,575; Mr. Moss 16,151; Mr. Freed 9,253; and Ms. Bryant 7,362. | ||
In accordance with the Company’s Supplemental Nonqualified Deferred Compensation Plan, irrevocable elections to defer a portion of 2004 cash incentive bonuses were required to be made in December of 2003. | ||
(b) | The Named Executive Officers receive certain personal benefits, including financial planning and tax preparation services, an automobile and gasoline allowance and automobile insurance reimbursement; however, in accordance with Securities and Exchange Commission rules, personal benefits for each Named Executive Officer in 2004 totaling less than $50,000 in aggregate incremental cost to the Company have been omitted. Of the amount reported for Mr. Karatz, $113,010 related to the incremental cost to the Company for his personal use of Company owned aircraft. | |
(c) | Payouts in 2004 to all participants under the Company’s long-term incentive program, the Unit Performance Program, were paid in cash. | |
(d) | These amounts represent the Company’s aggregate contributions to the Company’s 401(k) Savings Plan, Supplemental Nonqualified Deferred Compensation Plan and the amount of interest earned on the Executive Deferred Compensation Plan at a rate in excess of 120% of the applicable federal rate. In fiscal 2004 the Named Executive Officers accrued the following respective amounts under such plans: Mr. Karatz $12,300, $47,700 and $41,528; Mr. Mezger $12,300, $16,500 and $0; Mr. Moss $12,300, $3,300 and $0; Mr. Freed $12,300, $1,500 and $0; and Ms. Bryant $12,300, $3,713 and $0. |
37
Table of Contents
Number of | Percent of | Potential Realizable Value at | ||||||||||||||||||||||||||
Securities | Total | Assumed Annual Rate of | ||||||||||||||||||||||||||
Underlying | Options | Stock Price Appreciation for | ||||||||||||||||||||||||||
Options | Granted to | Exercise or | Option Term(c) | |||||||||||||||||||||||||
Granted | Employees in | Base Price | Grant | Expiration | ||||||||||||||||||||||||
Name | (#)(a) | Fiscal Year | ($/sh)(b) | Date | Date | 5%($) | 10%($) | |||||||||||||||||||||
Bruce Karatz | 280,000 | 25.5 | % | $ | 76.50 | 10/22/04 | 10/22/19 | $ | 23,110,642 | $ | 68,056,656 | |||||||||||||||||
Jeffrey T. Mezger | 100,000 | 9.1 | 76.50 | 10/22/04 | 10/22/19 | 8,253,801 | 24,305,948 | |||||||||||||||||||||
Jay Moss | 12,500 | 1.1 | 76.50 | 10/22/04 | 10/22/19 | 1,031,725 | 3,038,244 | |||||||||||||||||||||
Robert Freed | 12,500 | 1.1 | 76.50 | 10/22/04 | 10/22/19 | 1,031,725 | 3,038,244 | |||||||||||||||||||||
Leah S.W. Bryant | 12,500 | 1.1 | 76.50 | 10/22/04 | 10/22/19 | 1,031,725 | 3,038,244 | |||||||||||||||||||||
(a) | Except as noted below, options reported are original option grants and are exercisable in cumulative 33% installments commencing one year from the date of grant, with full vesting occurring on the third anniversary of the date of grant. The options granted on October 22, 2004 represent annual equity incentive awards to the Named Executive Officers for fiscal 2005. |
(b) | All options were granted at market value on the date of grant. The term “market value” as used with respect to this table was computed as the average of the high and low stock prices for the Company’s Common Stock on the New York Stock Exchange on the date of grant. The exercise price and tax withholding obligations related to exercise may be paid by delivery of already owned shares or by withholding a number of the underlying shares, subject to certain conditions. |
(c) | Gains are net of the option exercise price, but before taxes associated with exercise. These amounts represent certain assumed rates of appreciation over the 15-year term of the options. Actual gains, if any, on stock option exercises are dependent on the future performance of the Company’s Common Stock, overall stock market conditions, as well as the optionholders’ continued employment through the vesting period. The amounts reflected in this table may not necessarily be achieved, or may be exceeded. |
38
Table of Contents
Number of Unexercised | Value of Unexercised | |||||||||||||||||||||||
Options Held at Fiscal | In-the-Money Options at | |||||||||||||||||||||||
Shares | Year End(#) | Fiscal Year End($)(b) | ||||||||||||||||||||||
Acquired on | Value | |||||||||||||||||||||||
Name | Exercise(#) | Realized($)(a) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Bruce Karatz | 431,659 | $ | 25,977,391 | 1,995,818 | 543,334 | $ | 115,059,996 | $ | 12,738,132 | |||||||||||||||
Jeffrey T. Mezger | —0— | —0— | 678,612 | 241,332 | 36,747,665 | 5,729,649 | ||||||||||||||||||
Jay Moss | 33,919 | 2,030,142 | 37,267 | 30,366 | 2,136,590 | 681,382 | ||||||||||||||||||
Robert Freed | 29,999 | 1,901,604 | 18,934 | 30,366 | 718,249 | 681,382 | ||||||||||||||||||
Leah S.W. Bryant | 24,999 | 1,440,057 | 44,135 | 40,765 | 2,064,894 | 974,989 | ||||||||||||||||||
(a) | Represents the difference between the market value of the Company’s Common Stock at exercise minus the exercise price of the options. |
(b) | Represents the difference between the $87.89 closing price of the Company’s Common Stock on November 30, 2004 on the New York Stock Exchange and the exercise price of the options. |
Estimated Future Payout in Shares | ||||||||||||||||||||
Number of | of Common Stock | |||||||||||||||||||
Performance | ||||||||||||||||||||
Name | Units(#)(a) | Performance Period | Threshold(#)(b) | Target(#) | Maximum(#) | |||||||||||||||
Bruce Karatz | 700 | 12/1/03 — 11/30/06 | $ | 350,000 | $ | 700,000 | $ | 1,050,000 | ||||||||||||
Jeffrey T. Mezger | 500 | 12/1/03 — 11/30/06 | 250,000 | 500,000 | 750,000 | |||||||||||||||
Jay Moss | 250 | 12/1/03 — 11/30/06 | 125,000 | 250,000 | 375,000 | |||||||||||||||
Robert Freed | 250 | 12/1/03 — 11/30/06 | 125,000 | 250,000 | 375,000 | |||||||||||||||
Leah S.W. Bryant | 250 | 12/1/03 — 11/30/06 | 125,000 | 250,000 | 375,000 | |||||||||||||||
(a) | At the beginning of fiscal 2004, the Company awarded Performance Units under the Unit Performance Program for the fiscal 2004 – 2006 performance period. Each Performance Unit represents the opportunity to receive an award payable in cash or in shares of Common Stock. The dollar value or actual number of shares awarded at the end of the performance period will depend upon the Company’s cumulative earnings per share, or EPS and average pre-tax return on investment, or PROI, during the performance period. The target dollar value or number of shares will be awarded if a specified, targeted cumulative EPS and average PROI are achieved for the period. The threshold dollar value or number of shares, equal to 50% of the target number, will be awarded if a specified minimum cumulative EPS and |
39
Table of Contents
average PROI are achieved for the period. Achievement of either the specified minimum cumulative EPS or average PROI, but not both, would result in a smaller payout than the threshold dollar value or number of shares. The maximum dollar value or number of shares, equal to 150% of the target number, will be awarded if the specified maximum cumulative EPS and average PROI for the period are achieved or exceeded. If paid out in shares, the number of shares awarded at the end of the performance period will depend on the market value of the Common Stock at that time. |
(b) | No award will be made upon the vesting of a Performance Unit if neither the specified minimum cumulative EPS nor the specified minimum average PROI is achieved for the 2004 – 2006 performance period. |
40
Table of Contents
41
Table of Contents
Fiscal Year Ended | |||||||||
(in thousands) | |||||||||
2004 | 2003 | ||||||||
Audit Fees | $ | 1,758 | $ | 946 | |||||
Audit-related Fees | 140 | 181 | |||||||
Tax Fees | 43 | 41 | |||||||
All Other Fees | -0- | -0- | |||||||
Total Fees | $ | 1,941 | $ | 1,168 | |||||
42
Table of Contents
43
Table of Contents
44
Table of Contents
PROXY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
APRIL 7, 2005
CONFIDENTIAL INSTRUCTIONS TO FIDELITY MANAGEMENT TRUST COMPANY
TRUSTEE FOR THE KB HOME 401(k) SAVINGS PLAN
Receipt of proxy material for the above Annual Meeting is acknowledged. I instruct you to vote (in person or by proxy) all shares of Common Stock of KB Home (the “Company”) held by you for my account under the Company’s Amended and Restated 401(k) Savings Plan at the Company’s Annual Meeting of Stockholders to be held on April 7, 2005, and at all adjournments thereof, on the matters as indicated on the reverse side of this card and in your discretion on any other matters that may come before the Annual Meeting and as to which discretionary authority is permitted by applicable law. If this card is signed and returned, but no choice is specified, I instruct you to vote this proxy FOR Proposal 1, FOR Proposal 2, FOR Proposal 3 and upon such other business as may come before the Annual Meeting in accordance with the Board of Directors’ recommendation.
PLEASE MARK, DATE AND SIGN THESE INSTRUCTIONS AND RETURN THEM PROMPTLY, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING.
(Continued, and to be marked, dated and signed, on the other side)
Address Change/Comments(Mark the corresponding box on the reverse side)
ANNUAL MEETING OF STOCKHOLDERS APRIL 7, 2005
Dear Fellow Employee:
Just a reminder, your vote and your investment in KB Home are very important. Please complete and return your Confidential Instruction Card for tabulation by no later than April 4, 2005 to ensure that your vote is counted.
Bruce Karatz
Chairman and Chief Executive Officer
Table of Contents
Mark here for address change or comments. | o | |
PLEASE SEE REVERSE SIDE |
YOUR DIRECTORS RECOMMEND A VOTE“FOR” | FOR (EXCEPT AS MARKED TO THE CONTRARY) | WITHHOLD AUTHORITY TO VOTE FOR NOMINEES LISTED | ||||||||
1. | ELECTION OF DIRECTORS NOMINEES IN CLASS I: | o | o | |||||||
01 JAMES A. JOHNSON | 03 DR. BARRY MUNITZ | |||||||||
02 J. TERRENCE LANNI |
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE’S NAME.
FOR | AGAINST | ABSTAIN | ||||||
2. | PROPOSAL TO AMEND THE AMENDED CERTIFICATE OF INCORPORATION OF KB HOME TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF KB HOME COMMON STOCK FROM 100 MILLION SHARES TO 300 MILLION SHARES. | o | o | o | ||||
3. | PROPOSAL TO RATIFY ERNST & YOUNG LLP AS KB HOME’S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING NOVEMBER 30, 2005. | o | o | o |
You may consent to receive all future annual meeting materials and stockholder communications electronically.Enroll atwww.melloninvestor.com/ISD for secure online access to your proxy materials, statements, tax documents and other stockholder correspondence.
Signature(s) | Date | , | 2005 | |||||
Note: Please sign EXACTLY as your name appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please give full title. If more than one trustee, all should sign. Joint owners should sign.
Vote by Telephone
24 Hours a Day, 7 Days a Week
Telephone voting is available through 11:59PM Eastern Time
the day prior to annual meeting day.
Your telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
Telephone 1-866-540-5760 Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. | OR | Mail Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope |
If you vote your proxy by telephone,
you do NOT need to mail back your proxy card.
Table of Contents
PROXY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
APRIL 7, 2005
The undersigned hereby appoints Bruce Karatz and Kimberly N. King, and each of them, as proxies with full power of substitution and revocation, to vote all of the shares of KB Home Common Stock the undersigned is entitled to vote at the KB Home Annual Meeting of Stockholders to be held on April 7, 2005, or at any adjournment thereof, upon the Proposals set forth on the reverse side of this Proxy Card and described in the accompanying Proxy Statement, and upon such other business as may properly come before the meeting or any adjournment thereof.
(Continued, and to be marked, dated and signed, on the other side)
Address Change/Comments(Mark the corresponding box on the reverse side)
Table of Contents
Mark here for address change or comments. | o | |
PLEASE SEE REVERSE SIDE |
YOUR DIRECTORS RECOMMEND A VOTE“FOR” | FOR (EXCEPT AS MARKED TO THE CONTRARY) | WITHHOLD AUTHORITY TO VOTE FOR NOMINEES LISTED | ||||||||
1. | ELECTION OF DIRECTORS NOMINEES IN CLASS I: | o | o | |||||||
01 JAMES A. JOHNSON | 03 DR. BARRY MUNITZ | |||||||||
02 J. TERRENCE LANNI |
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE’S NAME.
FOR | AGAINST | ABSTAIN | ||||||
2. | PROPOSAL TO AMEND THE AMENDED CERTIFICATE OF INCORPORATION OF KB HOME TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF KB HOME COMMON STOCK FROM 100 MILLION SHARES TO 300 MILLION SHARES. | o | o | o | ||||
3. | PROPOSAL TO RATIFY ERNST & YOUNG LLP AS KB HOME’S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING NOVEMBER 30, 2005. | o | o | o |
You may consent to receive all future annual meeting materials and stockholder communications electronically.Enroll at www.melloninvestor.com/ISD for secure online access to your proxy materials, statements, tax documents and other stockholder correspondence.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted FOR proposals 1, 2 and 3.
Signature(s) | Date | , | 2005 | |||||
Note: Please sign EXACTLY as your name appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please give full title. If more than one trustee, all should sign. Joint owners should sign.
Vote by Telephone
24 Hours a Day, 7 Days a Week
Telephone voting is available through 11:59PM Eastern Time
the day prior to annual meeting day.
Your telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
Telephone 1-866-540-5760 Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. | OR | Mail Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope |
If you vote your proxy by telephone,
you do NOT need to mail back your proxy card.
Table of Contents
PROXY
ANNUAL MEETING OF STOCKHOLDERS
APRIL 7, 2005
CONFIDENTIAL INSTRUCTIONS TO WACHOVIA BANK, N.A.
TRUSTEE FOR THE KB HOME GRANTOR STOCK TRUST
With respect to the voting at the Annual Meeting of Stockholders of KB Home (the “Company”) to be held on April 7, 2005, or any adjournment or postponement thereof, the undersigned participant in the Company’s employee stock option plans hereby directs Wachovia Bank, N.A., as Trustee of the Company’s Grantor Stock Trust, to vote all of the shares for which the undersigned is entitled to direct the vote under the Grantor Stock Trust in accordance with the following instructions:
THE VOTES THAT THE UNDERSIGNED IS ENTITLED TO DIRECT UNDER THE COMPANY’S GRANTOR STOCK TRUST WILL BE VOTED AS DIRECTED ON THE REVERSE SIDE HEREOF. IF THIS CARD IS SIGNED AND RETURNED, BUT NO CHOICE IS INDICATED, THE VOTES THAT THE UNDERSIGNED IS ENTITLED TO DIRECT WILL BE VOTED FOR PROPOSAL 1, FOR PROPOSAL 2, FOR PROPOSAL 3 AND UPON SUCH OTHER BUSINESS AS MAY COME BEFORE THE ANNUAL MEETING IN ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS.
PLEASE MARK, DATE AND SIGN THESE INSTRUCTIONS AND RETURN THEM PROMPTLY, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING.
(Continued, and to be marked, dated and signed, on the other side)
Address Change/Comments(Mark the corresponding box on the reverse side)
ANNUAL MEETING OF STOCKHOLDERS APRIL 7, 2005
Dear Fellow Employee:
Just a reminder, your vote and your investment in KB Home are very important. Please complete and return your Confidential Instruction Card for tabulation by no later than April 4, 2005 to ensure that your vote is counted.
Bruce Karatz
Chairman and Chief Executive Officer
Table of Contents
Mark here for address change or comments. | o | |
PLEASE SEE REVERSE SIDE |
YOUR DIRECTORS RECOMMEND A VOTE“FOR” | FOR (EXCEPT AS MARKED TO THE CONTRARY) | WITHHOLD AUTHORITY TO VOTE FOR NOMINEES LISTED | ||||||||
1. | ELECTION OF DIRECTORS NOMINEES IN CLASS I: | o | o | |||||||
01 JAMES A. JOHNSON | 03 DR. BARRY MUNITZ | |||||||||
02 J. TERRENCE LANNI |
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE’S NAME.
FOR | AGAINST | ABSTAIN | ||||||
2. | PROPOSAL TO AMEND THE AMENDED CERTIFICATE OF INCORPORATION OF KB HOME TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF KB HOME COMMON STOCK FROM 100 MILLION SHARES TO 300 MILLION SHARES. | o | o | o | ||||
3. | PROPOSAL TO RATIFY ERNST & YOUNG LLP AS KB HOME’S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING NOVEMBER 30, 2005. | o | o | o |
You may consent to receive all future annual meeting materials and stockholder communications electronically.Enroll at www.melloninvestor.com/ISD for secure online access to your proxy materials, statements, tax documents and other stockholder correspondence.
Signature(s) | Date | , | 2005 | |||||
Note: Please sign EXACTLY as your name appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please give full title. If more than one trustee, all should sign. Joint owners should sign.
Vote by Telephone
24 Hours a Day, 7 Days a Week
Your telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
Telephone 1-866-540-5760 Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. | OR | Mail Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope |
If you vote your proxy by telephone,
you do NOT need to mail back your proxy card.