Exhibit 10.2

D.R. HORTON, INC.

GRANT NOTICE FOR 2006 STOCK INCENTIVE PLAN

PERFORMANCE RESTRICTED STOCK UNITS

FOR GOOD AND VALUABLE CONSIDERATION, D. R. Horton, Inc. (the “Company”), hereby
grants to Grantee named below the number of performance restricted stock units
specified below (the “Award” or the “Performance RSUs”), upon the terms and
subject to the conditions set forth in this Grant Notice, the Company’s 2006
Stock Incentive Plan, as amended and restated (the “Plan”) and the Standard
Terms and Conditions (the “Standard Terms and Conditions”) adopted pursuant to
such Plan and provided to Grantee, each as amended from time to time. Each
performance restricted stock unit subject to this Award represents the right to
receive one share of the Company’s Common Shares, subject to the conditions set
forth in this Grant Notice, the Plan and the Standard Terms and Conditions. This
Award is granted pursuant to the Plan and is subject to and qualified in its
entirety by the Standard Terms and Conditions.

 

Name of Grantee:

 

Approval Date:

Grant Date:

Vesting Period:

 

Number of performance restricted stock units subject to the Award at target and
maximum performance:

 

                    (Target) (“Target Award”)

 

                    (Maximum)

By accepting this Grant Notice, Grantee acknowledges that he or she has received
and read, and agrees that this Award shall be subject to, the terms of this
Grant Notice, the Plan and the Standard Terms and Conditions.

 

Grantee:

 

 

    D.R. HORTON, INC.,         a Delaware Corporation

Printed Name:

 

 

              By:   The Compensation Committee of the           Board of
Directors         By:  

 

        Name:           Title:  

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D.R. HORTON, INC.

STANDARD TERMS AND CONDITIONS FOR

PERFORMANCE RESTRICTED STOCK UNITS

These Standard Terms and Conditions apply to any Award of performance restricted
stock units granted to an employee of the Company under the Company’s 2006 Stock
Incentive Plan, as amended and restated (the “Plan”), as approved by the
Compensation Committee on             , 20        , which are evidenced by a
Grant Notice or an action of the Committee that specifically refers to these
Standard Terms and Conditions.

 

1. TERMS OF PERFORMANCE RESTRICTED STOCK UNITS

D.R. Horton, Inc., a Delaware corporation (the “Company”), has granted to the
Grantee named in the Grant Notice provided to said Grantee herewith (the “Grant
Notice”) an award of a number of performance restricted stock units (the “Award”
or the “Performance RSUs”) specified in the Grant Notice. Each Performance RSU
represents the right to receive one share of the Company’s Common Shares, $0.01
par value per share (the “Common Shares”) upon the terms and subject to the
conditions set forth in the Grant Notice, these Standard Terms and Conditions,
and the Plan, each as amended from time to time.

The Compensation Committee reserves the right to pay the final earned and vested
Performance RSUs in equity, cash or a combination of both.

The Compensation Committee may use its sole discretion to adjust downward, in
part or in whole the vested Performance RSUs or the value of the Performance
RSUs based on performance of the Company, including based on total annual
pre-tax income or stock price of the Company, the performance of the participant
or other factors in the Compensation Committee’s sole discretion.

 

2. VESTING OF PERFORMANCE RESTRICTED STOCK UNITS

The Award shall not be vested as of the Grant Date set forth in the Grant Notice
and shall be forfeitable unless and until otherwise vested pursuant to the terms
of these Standard Terms and Conditions. After the Grant Date, subject to
termination or acceleration as provided in these Standard Terms and Conditions
and the Plan, the Award shall become vested as described in this Section 2 with
respect to that number of Performance RSUs as described in this Section 2.

 

  A. The number of Performance RSUs that may be paid to you shall be based upon
the Company’s achievement of the following four performance goals (“Performance
Goals”) over the Performance Period: (i) Relative Total Shareholder Return
(“TSR”) (as defined in Section 17), (ii) Relative Return on Investment (“ROI”)
(as defined in Section 17), (iii) Relative SG&A Containment (“SG&A Containment”
or “SG&A”) (as defined in Section 17), and (iv) Relative Gross Profit (“GP”) (as
defined in Section 17). Each of TSR, ROI, SG&A and GP shall be given twenty-five
percent (25%) weight when ranking relative performance and when calculating the
final vesting of the Award. See Exhibit C for examples of this calculation.
Ranking of the relative performance of the Company and its peers shall be in
accordance with the following ranking tables:

 

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Total Shareholder Return (weighted 25% of Target Award)

The Grantee shall vest in the TSR portion of the Award based on the Company’s
performance of Total Shareholder Return as compared to the Total Shareholder
Return of the S&P 500 Index over the three year Performance Period. Total
Shareholder Return is to be determined by Standard and Poor’s after the
Performance Period using the same or materially similar criteria used by them in
preparing the stock performance graph included each year in the Company’s public
filings (Form 10-K for proxy statement, as applicable). The Grantee shall
receive the number of Performance RSUs in relation to the Company’s TSR
performance as compared to the S&P 500 Index’s TSR performance as set forth in
the table below (See Exhibit A for examples of hypothetical TSR rankings):

 

Company TSR

relative to

S&P 500 Index TSR

   Number of
Performance RSUs Awarded

10 percentage points below

   zero   

9 percentage points below

   —      (Threshold)

8 percentage points below

   —     

7 percentage points below

   —     

6 percentage points below

   —     

5 percentage points below

   —     

4 percentage points below

   —     

3 percentage points below

   —     

2 percentage points below

   —     

1 percentage point below

   —     

Equal to S&P 500 Index TSR

   —      (Target)

1 percentage point above

   —     

2 percentage points above

   —     

3 percentage points above

   —     

4 percentage points above

   —     

5 percentage points above

   —     

6 percentage points above

   —     

7 percentage points above

   —     

8 percentage points above

   —     

9 percentage points above

   —     

10 percentage points above

   —      (Maximum)

The final number of Performance RSUs under this TSR Performance Goal shall be
determined using the above percentages and rankings. Performance and percentages
that fall between those listed in the table above shall be ranked using linear
interpolation. Under the TSR component of the Performance Goals and after giving
effect to the 25% weighting to the total Target Award, the number of Performance
RSUs that can be earned is as follows:             Maximum,             Target
and             Threshold.

 

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ROI and SG&A and GP (each weighted 25% of Target Award)

 

Performance Level

Compared to Peer Group

   Payout    Performance
RSUs

1st Place  

   Maximum    —  

2nd Place  

      —  

3rd Place  

      —  

4th Place  

      —  

5th Place  

   Target    —  

6th Place  

      —  

7th Place  

      —  

8th Place  

      —  

9th Place  

      —  

10th Place

   Threshold    —  

11th Place

      zero

Note: See Exhibit B for the complete listing of Homebuilder Peer Group.

The final number of Performance Units under the ROI, SG&A and GP Performance
Goals shall be determined using the above table. Under these three components of
the Performance Goals, the collective number of Performance RSUs that can be
earned is: Maximum             , Target             , and Threshold
            .

 

  B. After adjustment for forfeitures as provided in Section 2, the number of
Performance RSUs paid to you will be determined based on the Company’s ranking
on each of the four Performance Goals. Notwithstanding the foregoing, the
maximum number of Performance RSUs you can earn will be an aggregate of 200%
(two times) the original Target Award granted to you, and the minimum number of
Performance RSUs that you can earn is zero.

 

  C. Issuance of shares earned under this Award shall be made to you as soon as
practicable but no later than 45 days following certification by the
Compensation Committee of the Board of Directors of the Company (the
“Committee”) as set forth below, unless you timely elect a deferred
payment/receipt in the manner and within the time frames specified by the
Committee and in compliance with Code Section 409A (the “Payout Date”). In the
event of your death prior to the Payout Date, any amount payable to you under
the Award will be paid to your designated beneficiary or, if none, to your
estate. Prior to any issuance under this Award, the Committee shall certify in
writing, by resolution or otherwise, that the Performance Goals and any other
material terms of the Award were in fact satisfied and the amount to be paid in
respect of the Performance RSUs as a result of the achievement of the
Performance Goals.

 

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  D. The Award shall vest as follows:

The number of Performance RSUs that vest will be determined after the completion
of the performance period, which shall begin on                     , 20        
and end on                     , 20         (the “Performance Period”), and will
be based on the final peer rankings on each of the four Performance Goals as set
forth in this Section 2.

Notwithstanding anything contained in these Standard Terms and Conditions to the
contrary:

 

  (i) if the Grantee’s separation from service is due to death or disability
before                     , 20        , then after the Performance Period is
completed and vesting determined, if any, the Grantee or his beneficiaries will
be paid a number of Performance RSUs determined on a pro-rata basis based on the
number of full months completed from the Grant Date before the death or
disability.

 

  (ii) if after 13 months has passed since the Grant Date, the Grantee’s
separation from service is due to voluntary (without cause) or involuntary
(without cause) termination, retirement or resignation before
                    , 20        , then after the Performance Period is completed
and vesting determined, if any, the Grantee will be paid a number of Performance
RSUs determined on a pro-rata basis based on the number of full months completed
from the Grant Date to the date of separation of service.

 

  (iii) if the Grantee’s separation from service is for any reason other than
those listed in (i) and (ii) above, any unvested portion of the Award held by
the Grantee shall be forfeited and canceled as of the date of such separation of
service.

For purposes of this Section 2, “pro-rata portion” means a percentage, where the
numerator is the number of full months completed between                     ,
20         and the date of the Grantee’s separation of service, and the
denominator is                      months.

 

3. SETTLEMENT OF PERFORMANCE RESTRICTED STOCK UNITS

Vested Performance RSUs shall be settled by the delivery to the Grantee or a
designated brokerage firm of one Share per vested Performance RSU on or before
                    , 20         or as soon as reasonably practicable
thereafter.

 

4. RIGHTS AS STOCKHOLDER

The Grantee shall have no voting rights and no right to receive any dividends
with respect to Common Shares underlying Performance RSUs unless and until such
Common Shares are reflected as issued and outstanding shares on the Company’s
stock ledger.

 

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5. CHANGE IN CONTROL

Unless otherwise provided in an employment, severance or other agreement between
the Company and the Grantee, the Committee shall determine the effect of a
Change in Control on all unvested Performance RSUs. Without limitation, the
Committee may provide for the acceleration of vesting of all or a portion of the
unvested Performance RSUs at such performance level as determined by the
Committee, for a payment based on the Change in Control Price in settlement of
the Performance RSUs at such performance level as determined by the Committee,
or for the assumption or substitution of Performance RSUs by the Grantee’s
employer (or the parent or an Affiliate of such employer) or other service
recipient that engages the Grantee immediately following the Change in Control.
In all events, any action under this Section 5 shall comply with the applicable
requirements of Section 409A of the Code.

 

6. RESTRICTIONS ON RESALES OF SHARES

The Company may impose such restrictions, conditions or limitations as it
determines appropriate as to the timing and manner of any resales by the Grantee
or other subsequent transfers by the Grantee of any Common Shares issued in
respect of vested Performance RSUs, including without limitation
(a) restrictions under an insider trading policy, (b) restrictions designed to
delay and/or coordinate the timing and manner of sales by Grantee and other
holders and (c) restrictions as to the use of a specified brokerage firm for
such resales or other transfers.

 

7. INCOME TAXES

The Company shall not deliver shares in respect of any Performance RSUs unless
and until the Grantee has made arrangements satisfactory to the Committee to
satisfy applicable withholding tax obligations. Unless otherwise permitted by
the Committee, withholding shall be effected by withholding Common Shares
issuable in connection with the delivery of the Performance RSUs (net
withholding provision) in an amount to satisfy the Grantee’s withholding tax
obligations. The Grantee acknowledges that the Company shall have the right to
deduct any taxes required to be withheld by law in connection with the delivery
of the Performance RSUs from any amounts payable by it to the Grantee
(including, without limitation, future cash wages).

 

8. NON-TRANSFERABILITY OF AWARD

The Grantee represents and warrants that the Performance RSUs are being acquired
by the Grantee solely for the Grantee’s own account for investment and not with
a view to or for sale in connection with any distribution thereof. The Grantee
further understands, acknowledges and agrees that, except as otherwise provided
in the Plan, the Performance RSUs may not be sold, assigned, transferred,
pledged or otherwise directly or indirectly encumbered or disposed of except to
the extent expressly permitted hereby and at all times in compliance with the
U.S. Securities Act of 1933, as amended, and the rules and regulations of the
Securities Exchange Commission thereunder, and in compliance with applicable
state securities or “blue sky” laws and non-U.S. securities laws. Unless
permitted by the Committee, the Performance RSUs may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated by the Grantee other
than by will or the laws of descent and distribution.

 

6

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9. THE PLAN AND OTHER AGREEMENTS

In addition to these Terms and Conditions, the Award shall be subject to the
terms of the Plan, which are incorporated into these Standard Terms and
Conditions by this reference. Certain capitalized terms not otherwise defined
herein are defined in the Plan. In the event of a conflict between the terms and
conditions of these Standard Terms and Condition and the Plan, the Plan
controls.

Subject to the next paragraph, the Grant Notice, these Standard Terms and
Conditions and the Plan constitute the entire understanding between the Grantee
and the Company regarding the Award, and any prior agreements, commitments or
negotiations concerning the Award are superseded.

The Award (including the terms described herein) are subject to the provisions
of the Plan and, if the Grantee is outside the U.S., there may be an addendum
containing special terms and conditions applicable to grants in the Grantee’s
country. The grant of the Performance RSUs to any such Grantee is contingent
upon the Grantee executing and returning any such addendum in the manner
directed by the Company.

 

10. NOT A CONTRACT FOR EMPLOYMENT

Nothing in the Plan, in the Grant Notice, these Standard Terms and Conditions or
any other instrument executed pursuant to the Plan shall confer upon the Grantee
any right to continue in the Company’s employ or service nor limit in any way
the Company’s right to terminate the Grantee’s employment or other service at
any time for any reason.

 

11. SEVERABILITY

In the event that any provision of these Standard Terms and Conditions is
declared to be illegal, invalid or otherwise unenforceable by a court of
competent jurisdiction, such provision shall be reformed, if possible, to the
extent necessary to render it legal, valid and enforceable, or otherwise
deleted, and the remainder of these Standard Terms and Conditions shall not be
affected except to the extent necessary to reform or delete such illegal,
invalid or unenforceable provision.

 

12. HEADINGS

The headings preceding the text of the sections hereof are inserted solely for
convenience of reference, and shall not constitute a part of these Standard
Terms and Conditions, nor shall they affect its meaning, construction or effect.

 

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13. FURTHER ASSURANCES

Each party shall cooperate and take such action as may be reasonably requested
by another party in order to carry out the provisions and purposes of these
Standard Terms and Conditions.

 

14. BINDING EFFECT

These Standard Terms and Conditions shall inure to the benefit of and be binding
upon the parties hereto and their respective permitted heirs, beneficiaries,
successors and assigns.

 

15. ELECTRONIC DELIVERY

By executing the Grant Notice, the Grantee hereby consents to the delivery of
information (including, without limitation, information required to be delivered
to the Grantee pursuant to applicable securities laws) regarding the Company and
its subsidiaries, the Plan, and the Performance RSUs via Company web site or
other electronic delivery.

 

16. SECTION 409A

The Award shall be administered pursuant to the requirements of Section 409A of
the Code. For purposes hereof, “separation from service” shall have the meaning
specified in Section 409A of the Code and the regulations thereunder. To the
extent required by Section 409A of the Code, any payment hereunder to a Grantee
is a “specified employee” shall be delayed until six months following such
Grantee’s separation from service.

 

17. DEFINITIONS

Total Shareholder Return: For purposes of Total Shareholder Return, the
following terms shall have the following meanings:

“Relative Total Shareholder Return” for the Performance Period means the
Company’s Total Shareholder Return, as compared to the S&P 500 Index Total
Shareholder Return. See Exhibit A for examples of this calculation. For this
purpose the Total Shareholder Return shall be computed by Standard and Poor’s.

“Total Shareholder Return” shall mean the total shareholder return of the
Company over the Performance Period as determined by Standard and Poor’s after
the Performance Period using the same or materially similar criteria used by
Standard and Poor’s in preparing the stock performance graph included each year
in the Company’s public filings (Form 10-K or proxy statement, as applicable).

 

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Return on Investment: For purposes of Return on Investment, the following terms
shall have the following meanings:

“Annual Pre-Tax Income” for a period of four consecutive quarters means the sum
of quarterly income (loss) before income taxes (including corporate general and
administrative expenses) during the four quarters of the Company’s fiscal year.

“Annual Return on Investment” or “Annual ROI” for a period of four consecutive
quarters means the Annual Pre-Tax Income for the four quarters of the Company’s
fiscal year divided by the Annual Total Assets for the four quarters of the
Company’s fiscal year.

“Annual Total Assets” for a period of four consecutive quarters of the Company’s
fiscal year means the average of the beginning balance of total assets as of the
end of the quarter immediately preceding the first quarter (i.e.,             ,
20        ) and as of the end of each of the four quarters of the Company’s
fiscal year (i.e., December 31st, March 31st, June 30th and September 30th).

“Performance Period Return on Investment” or “Performance Period ROI” means the
sum of (1) the Annual ROI for the four consecutive quarters ending             ,
20        , and (2) the Annual ROI for the four consecutive quarters ending
            , 20        , and (3) the Annual ROI for the four consecutive
quarters ending             , 20        .

“Relative Return on Investment” or “Relative ROI” means the Performance Period
ROI of the Company, compared to the other members of the Homebuilding Peer
Group.

SG&A Containment: For purposes of SG&A Containment or SG&A, the following terms
shall have the following meanings:

“SG&A Containment” or “SG&A” means consolidated selling, general and
administrative expense (including corporate general and administrative expenses)
as a percent of consolidated revenue determined from the Company’s or from a
Homebuilding Peer Group member’s, as applicable, Consolidated Statements of
Operations (or equivalent statement or disclosure in a publicly filed Form 10-K
or Form 10-Q), for the Performance Period.

“Relative SG&A Containment” means the SG&A Containment (of the Company and each
member of the Homebuilding Peer Group, determined on an individual basis as
applicable), as compared to and ranked with the other members of the
Homebuilding Peer Group.

 

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Gross Profit: For purposes of Gross Profit, the following terms shall have the
following meanings:

“Gross Profit” means gross profit (total revenue minus total cost of sales,
including impairments and related write-off costs) divided by total revenue
(expressed as a percentage) as reported in the Consolidated Statements of
Operations (or equivalent statement or disclosure in a publicly filed Form 10-K
or Form 10-Q), for the Performance Period, expressed in percentage terms.

“Relative Gross Profit” means the Gross Profit (of the Company and each member
of the Homebuilding Peer Group, determined on an individual basis as
applicable), as compared to and ranked with the other members of the
Homebuilding Peer Group.

Other Definitions:

“Code” means the Internal Revenue Code of 1986, as amended, and the rulings,
regulations and other guidance thereunder.

“Homebuilding Peer Group” means the companies listed on Exhibit B. If a member
of the Peer Group is acquired or is otherwise a party to a corporate transaction
and no longer exists as a separate entity, or if its common stock is delisted,
the ranking of the ROI, SG&A and GP Performance Goals of the Homebuilding Peer
Group will be determined for the performance period retroactively to
            , 20        , without such former peer group member.

“Performance Period” means the 3-year period (12 quarters or 36 months)
beginning             , 20         and ending             , 20        . In
comparing results of the Company with the performance of the other companies in
the Homebuilding Peer Group, there shall be used the fiscal quarter that
corresponds to the same fiscal quarter of the Company, or if there is not a
comparable period, then the fiscal quarter ending most closely before a fiscal
quarter of the Company and, in the case of fiscal year computations, there shall
be used the four fiscal quarters ending at or most closely preceding the fiscal
year of the Company; provided that the performance metrics will be compared to
those of the Company’s Homebuilding Peer Group based on publicly available
information of the Homebuilding Peer Group at             , 20        ,
20         and 20        , as applicable.

“Retirement” has the meaning set forth in the Plan or in a manner consistent
with the Company’s other incentive plans or such date as the Committee shall
approve.

“Disability” has the meaning set forth in the Plan or in a manner consistent
with the Company’s other incentive plans or such date as the Committee shall
approve.

 

  (a) Rules of Construction. All references to Sections refer to sections in
this Award. The titles to sections of this Award are for convenience of
reference only and, in the case of conflict, the text of this Award, rather than
the titles, shall control.

 

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EXHIBIT A

Examples of Total Shareholder Return Rankings

Company compared to S&P 500 Index

Example 1: If after the Performance Period the S&P 500 Index had a Total
Shareholder Return of 10% and DHI had a Total Shareholder Return of 10% then the
ranking payout on this TSR Performance Goal would be equal to the Target RSUs of
            .

Example 2: If after the Performance Period the S&P 500 Index had a Total
Shareholder Return of 10% and DHI had a Total Shareholder Return of 5% then the
ranking payout on this TSR Performance Goal would equal to              RSUs.

Example 3: If after the Performance Period the S&P 500 Index had a Total
Shareholder Return of 10% and DHI had a Total Shareholder Return of 14% then the
ranking payout on this TSR Performance Goal would equal to              RSUs.

Example 4: If after the Performance Period the S&P 500 Index had a Total
Shareholder Return of 10% and DHI had a Total Shareholder Return of 20% then the
ranking payout on this TSR Performance Goal would equal to              RSUs.

Example 5: If after the Performance Period the S&P 500 Index had a Total
Shareholder Return of -5% and DHI had a Total Shareholder Return of -5% then the
ranking payout on this TSR Performance Goal would equal to              RSUs
(equal to Target).

Example 6: If after the Performance Period the S&P 500 Index had a Total
Shareholder Return of -4% and DHI had a Total Shareholder Return of -6% then the
ranking payout on this TSR Performance Goal would equal to              RSUs.

Example 7: If after the Performance Period the S&P 500 Index had a Total
Shareholder Return of -1% and DHI had a Total Shareholder Return of 0% (flat)
then the ranking payout on this TSR Performance Goal would equal to             
RSUs.

Example 8: If after the Performance Period the S&P 500 Index had a Total
Shareholder Return of -1% and DHI had a Total Shareholder Return of 1% then the
ranking payout on this TSR Performance Goal would equal to              RSUs.

 

A-1

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EXHIBIT B

MEMBERS OF HOMEBUILDING PEER GROUP

Peer Group for Operating Performance Metrics (ROI, SG&A and GP):

 

Beazer Homes USA    Meritage Homes Corp Hovnanian Enterprises    NVR, Inc. KB
Home    Pulte Homes Lennar Corporation    Ryland Group M.D.C. Holdings    Toll
Brothers

Total of ten companies in Homebuilder Peer Group related to ROI, SG&A and GP
(eleven including the Company (DHI)).

 

 

B-1

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EXHIBIT C

EXAMPLES OF FINAL RANKING CALCULATIONS

(to follow)

 

C-1