Exhibit 10.1

D.R. Horton, Inc.

Performance Unit Award

2008 Performance Unit Plan

[2.75-]Year Performance Unit Award

Dear                         :

You have been granted a Performance Unit Award as of                  , 200X by
D.R. Horton, Inc. (the “Company”) of              Bonus Units under the D.R.
Horton 2008 Performance Unit Plan (the “Plan”), subject to the terms and
conditions of the Plan and this Performance Unit Award (referred to herein as
“Award” or “Performance Unit Award”). Bonus Units are defined under the Plan and
such Bonus Units are referred to in this Award as “Performance Units”. A copy of
the Plan is attached to this Award.

This Award is subject to adjustment and other provisions as set forth on Exhibit
A hereto (the “Terms and Conditions”). Depending on the Company’s achievement of
the performance goals specified in the Terms and Conditions during the period
beginning [January 1, 2008 and ending September 30, 2010] (the “Performance
Period”), you shall be entitled to a payment (in the form of cash, equity or a
combination of both) equal to the value of your adjusted number of Performance
Units as of the last business day of the Performance Period determined under the
Terms and Conditions, less deductions for taxes and withholdings required by
law, except as otherwise provided herein.

For purposes of the Plan, (a) this Award is an award of Performance-Based
Compensation Award that may be settled in cash, equity or a combination of both,
and (b) amounts payable hereunder will not bear interest or be entitled to
dividends payable on Common Stock. This Award is given to you as part of your
compensation, but is neither voluntary nor contributory by you. This Award is
subject to the Plan in all respects, and the Compensation Committee will decide
on the interpretation of any provision of this Award if there is any ambiguity
between the Plan and this Award. The provisions of the Plan are also provisions
of this Award, and all terms, provisions and definitions set forth in the Plan
are incorporated in this Award and made a part of this Award for all purposes.
Capitalized terms used but not defined in this Award will have the meanings
assigned to such terms in the Plan.

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Exhibit A to Performance Unit Award — Terms and Conditions of Award

 

1. Award.

(a) The amount that may be paid to you with respect to the Performance Units
shall be based upon the Company’s achievement of the following performance goals
(“Performance Goals”) over the Performance Period as determined by the
Compensation Committee of the Board of Directors of the Company (or any
successor thereto) (the “Committee”): (i) Relative Return on Investment (“ROI”)
(as defined in Section 4), and (ii) Relative Net Sales Gains Percentage (“NSG%”)
(as defined in Section 4), in accordance with the following matrix:

 

 

Relative Return on Investment (“ROI”)

Performance Level

Compared to Peer Group

 

Payout

 

Performance

Percentage

1st Place

  Maximum   200%

2nd Place

    175%

3rd Place

    150%

4th Place

    125%

5th Place

  Target   100%

6th Place

    75%

7th Place

    50%

8th Place

    25%

9th Place

  Minimum   0%

10th Place

    0%

11th Place

    0%

 

 

Relative Net Sales Gains Percentage (“NSG%”)

Performance Level

Compared to Peer Group

 

Payout

 

Performance

Percentage

1st Place

  Maximum   200%

2nd Place

    175%

3rd Place

    150%

4th Place

    125%

5th Place

  Target   100%

6th Place

    75%

7th Place

    50%

8th Place

    25%

9th Place

  Minimum   0%

10th Place

    0%

11th Place

    0%

(b) After adjustment for forfeitures as provided in Section 2, the number of
Performance Units granted to you will be adjusted based on Relative ROI and
Relative NSG% (“Performance Percentage”) as provided in this Section. The
adjusted number of Performance Units to which you will be entitled shall be
equal to the number of Performance Units granted hereunder

 

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multiplied by the product of (i) 0.5 and (ii) the sum of the Performance
Percentages set forth in Section 1(a) for the level of achievement of each of
the performance goals therein (such product the “Adjusted Performance
Percentage”). Notwithstanding the foregoing, the maximum number of Performance
Units you can earn will be an aggregate of 200% of the original number granted
to you, and the minimum number of Performance Units that will be awarded is
zero. By way of example, assuming an initial grant of 200,000 Performance Units:

 

 

(1)

if the Company reached 1st place in Relative ROI and 3rd place in Relative NSG%,
the sum of the Performance Percentages would be 350% (200% plus 150%) and the
adjusted number of your Performance Units would be 350,000 ((350% x 0.5) x
200,000 units).

 

 

(2)

if Relative ROI reached 3rd place and Relative NSG% reached 5th place, the sum
of the Performance Percentages would be 250% (150% plus 100%) and the adjusted
number of your Performance Units would be 250,000 ((250% x 0.5) x 200,000
units).

(c) (i) Except as provided in Section 2, the adjusted number of Performance
Units, determined as provided in Section 1(b), will be multiplied by the Fair
Market Value of the Company’s Common Stock on the last business day of the
Performance Period (if payable in cash), or using the number of shares of the
Company’s Common Stock (or fully vested Restricted Stock Units for deferred
payments), equal to the adjusted number of Performance Units (if payable in
equity), and may be further adjusted as provided in Sections 1(c)(iii) and
(iv) below. Payment of amounts due under this Award shall be made to you as soon
as practicable but no later than 30 days following certification by the
Committee as set forth below, unless you timely elect a deferred payment 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 payments 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 Units as
a result of the achievement of the performance goals.

(ii) Any amount paid in respect of this Award may be paid in cash, equity or a
combination of both. If, after the final value of the Award is determined, the
Committee determines to pay a portion of the earned award in equity, the number
of shares to be awarded will be determined by dividing the closing price of the
Company’s common stock on the day of the certification of the Award by the
Committee into the dollar value of that portion of the Award to be paid in
equity, provided that the maximum award cannot exceed the limits established
under the Plan or the Company’s 2006 Stock Incentive Plan (the “2006 Plan”).

(iii) The Committee shall not increase the amount payable to you to an amount
that is higher than the amount payable under the formula described herein. The
Committee may take into account normalization related adjustments to the above
performance metrics and goals and each of the definitions in Section 4 in order
to provide a relevant and consistent comparison to the performance metrics and
goals of the Company’s Peer Group. For example, normalization related
adjustments to take into account unconsolidated joint ventures, extraordinary
items or transactions, asset write-offs, valuation allowances or impairments
among the Peer Group.

(iv) Prior to paying the Award, the Committee reserves the discretion to adjust
downward the Award depending a variety of factors, including (i) the level of
the Company’s consolidated pre-tax income or loss on both an adjusted and
non-adjusted basis, (ii) the compensation earned by the participant in
comparison to the compensation earned by other Company executives and executives
of the Company’s Peer Group, (iii) the participant’s overall

 

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compensation, (iv) the participant’s individual performance, and (v) other
factors listed in the 2008 Plan.

(d) The Company may cancel and revoke this Award and/or replace it with a
revised award at any time if the Company determines, in its good faith judgment,
that this Award was granted in error or that this Award contains an error. In
the event of such determination by the Company, and written notice thereof to
you at your business or home address, all of your rights and all of the
Company’s obligations as to any unvested portion of this Award shall immediately
terminate. If the Company replaces this Award with a revised award, then you
will have all of the benefits conferred under the revised award, effective as of
such time as the revised award goes into effect.

 

2. Early Termination and Change in Control.

(a) If your employment terminates before the last day of the Performance Period
as a result of your voluntary or involuntary termination or retirement, then you
shall forfeit as of the date of your termination of employment a number of
Performance Units determined by multiplying the number of Performance Units
granted to you by a fraction, (x) the numerator of which is the number of whole
months following the date of termination to the end of the Performance Period
and (y) the denominator of which is thirty-three (33). The resulting number of
Performance Units shall be adjusted upward or downward by the applicable
Adjusted Performance Percentage based on the Company’s achievement of the
Performance Goals as of the end of the Performance Period, and the value of the
adjusted number of Performance Units, using the Fair Market Value as of the last
day of the Performance Period (if payable in cash), or using the number of
shares of the Company’s Common Stock (or fully vested Restricted Stock Units for
deferred payments) equal to the adjusted number of Performance Units (if payable
in equity), shall be payable on the Payment Date, after being certified by the
Committee.

(b) If your employment terminates before the last day of the Performance Period
as a result of your death or disability (as determined by the Committee in its
sole discretion), or if you are disabled for more than 3 months during the
Performance Period (whether or not your employment terminates), then you shall
forfeit a number of Performance Units determined by multiplying the number of
Performance Units granted to you by a fraction, (x) the numerator of which is
the number of whole months following the date of death or Disability to the end
of the Performance Period (or, if you returned to employment before the end of
the Performance Period, the number of whole months you were on disability), and
(y) the denominator of which is thirty-three (33). The resulting number of
Performance Units shall be adjusted upward or downward by the applicable
Adjusted Performance Percentage based on the Company’s achievement of the
Performance Goals as of the end of the Performance Period, and the value of the
adjusted number of Performance Units, using the Fair Market Value as of the last
day of the Performance Period (if payable in cash), or using the number of
shares of the Company’s Common Stock (or fully vested Restricted Stock Units for
deferred payments) equal to the adjusted number of Performance Units (if payable
in equity), shall be payable on the Payment Date, after being certified by the
Committee.

 

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(c) The Committee or its designee shall determine the number of Performance
Units forfeited pursuant to the applicable subparagraph of this Section and the
amount to be paid to you or your beneficiary in accordance with this Section.
Except as provided in Section 2, amounts payable hereunder will be paid on the
Payout Date.

(d) If there is a Change in Control (as defined in the Plan) during the
Performance Period, you shall be deemed to have achieved the level of
performance as determined by the Committee for the Performance Goals for the
Performance Period in accordance with the terms of the Plan, with the deemed
Adjusted Performance Percentage being multiplied by the number of your
Performance Units and the Fair Market Value of the Company’s common stock on the
day immediately prior to the Change in Control, and then prorated for the number
of months in the Performance Period up to the Change in Control over 33 months,
as more fully set forth in the Plan. Payments of the amount due to you under
this Award shall be made to you as soon as administratively practicable
following the Change in Control, but in no event later than 60 days following
the end of the calendar year in which such Change in Control occurs.

(e) If you are terminated for cause, as determined by the Committee, you shall
immediately forfeit all Performance Units.

 

3. Miscellaneous.

(a) You understand and acknowledge that you are one of a limited number of
employees of the Company who have been selected to receive Performance Awards
and that this grant is considered confidential information. You hereby covenant
and agree not to disclose the award to you of this Award to any other person
except (i) your immediate family and legal or financial advisors who agree to
maintain the confidentiality of this Award, (ii) as required in connection with
the administration of this Award and the Plan as it relates to this Award or
under applicable law, or (iii) to the extent the terms of this Award had been
publicly disclosed by the Company.

(b) The Company shall be entitled to make all lawful deductions from any payment
it is required to make to you under this Award in respective applicable federal,
state, local or employment taxes, Social Security and Medicare.

(c) The authority to manage and control the operation and administration of this
Award shall be vested in the Committee, and the Committee shall have all powers
with respect to this Award as it has with respect to the Plan. Any
interpretation of this Award by the Committee and any decision made by it with
respect to this Award shall be final and binding on all persons.

(d) This Award and any deferral elections hereunder shall be construed and
interpreted to comply with or be exempt from Section 409A of the Code. The
Company reserves the right, without your prior consent, to modify or amend this
Award to the extent it reasonably determines is necessary in order to
(i) preserve the intended tax consequences of the Performance Units in light of
Section 409A of the Code and any regulations or other guidance promulgated
thereunder, or (ii) correct, with the consent of the Committee, unintentional
design errors. In addition, the Committee reserves the right, without your prior
consent, to reduce the amount payable under this Award to the extent it deems
necessary taking into account competitive performance and

 

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other factors. Such modifications or amendments may limit or eliminate certain
rights otherwise available to you under the Plan or this Award. Neither the
Company nor members of the Committee shall be liable for any determination or
action taken or made with respect to this Award or the Performance Units granted
hereunder.

(e) Neither this Award nor your rights hereunder shall be transferable during
your life other than by will, pursuant to the applicable laws of descent and
distribution or as provided in your beneficiary designation form, unless
otherwise provided in the Plan. None of your rights or privileges in connection
with this Award shall be transferred, assigned, pledged or hypothecated by you
or by any other person in any way, whether by operation of law, or otherwise,
and shall not be subject to execution, attachment, garnishment or similar
process. In the event of any such occurrence, this Award shall automatically be
terminated and shall thereafter be null and void.

(f) Nothing in this Award shall confer upon you any right to continued
employment with the Company or any of its subsidiaries, or to interfere in any
way with the right of the Company to terminate your employment relationship with
the Company or any of its subsidiaries at any time.

(g) If any term or provision of this Award shall at any time or to any extent be
invalid, illegal or unenforceable in any respect as written, you and the Company
intend for any court construing this Award to modify or limit such provision so
as to render it valid and enforceable to the fullest extent allowed by law. Any
such provision that is not susceptible of such reformation shall be ignored so
as not to affect any other term or provision hereof, and the remainder of this
Award, or the application of such term or provision to persons or circumstances
other than those as to which it has held invalid, illegal or unenforceable,
shall not be affected thereby and each term and provision of this Award shall be
valid and enforced to the fullest extent permitted by law.

(h) The Company’s obligation under the Plan and this Award is an unsecured and
unfunded promise to pay benefits that may be earned in the future. The Company
shall have no obligation to set aside, earmark or invest any fund or money with
which to pay its obligations under this Award. You or any successor in interest
shall be and remain a general creditor of the Company in the same manner as any
other creditor having a general claim from matured and unpaid compensation.

(i) This Award shall not entitle the holder to any dividends, rights upon
liquidation, voting rights or other rights of stockholders of the Company.

 

4. Definitions and Rules of Construction.

 

  (a) Definitions. The following terms have the meanings set forth below:

“Annual Net Sales” for a period of four consecutive quarters means the sum of
quarterly domestic (U.S.) net sales of homes (i.e., gross number of home sales
contracts less cancellations, determined in number of units) during the four
quarters of the Company’s fiscal year (provided

 

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that for the fiscal year ending September 30, 2008, the three consecutive
quarters ending September 30, 2008 shall be used).

“Annual Pre-Tax Income” for a period of four consecutive quarters means the sum
of quarterly income (loss) before income taxes during the four quarters of the
Company’s fiscal year (provided that for the fiscal year ending September 30,
2008, the three consecutive quarters ending September 30, 2008 shall be used).

“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 (provided that for the fiscal year ending September 30,
2008, the three consecutive quarters ending September 30, 2008 shall be used).

“Annual Total Assets” for a period of four consecutive quarters of the Company’s
fiscal year means the sum of the beginning balance of total inventories,
excluding land inventory not owned, as of the end of the quarter immediately
preceding the first quarter and as of the end of each of the four quarters of
the Company’s fiscal year (provided that for the fiscal year ending
September 30, 2008, the balance as of December 31, 2007 shall be summed with the
balances as of the end of each of the three consecutive quarters ended
September 30, 2008 shall be used).

“Baseline Net Sales” for a period of four consecutive quarters ending
December 31, 2007 means the sum of quarterly domestic (U.S.) net sales of homes
(i.e., gross number of home sales contracts less cancellations in units) during
the four quarters.

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

“Peer Group” means, in addition to the Company, Beazer Homes USA, Centex
Corporation, Hovnanian Enterprises, KB Home, Lennar Corporation, M.D.C.
Holdings, Pulte Homes, Ryland Group, Standard Pacific and Toll Brothers.

“Performance Period” means the 2.75 year period (11 quarters) beginning
January 1, 2008 and ending September 30, 2010. In comparing results of the
Company with the performance of the other companies in the 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 Peer Group based
on publicly available information of the Peer Group at September 30, 2008, 2009
and 2010, as applicable.

“Performance Period Return on Investment” or “Performance Period ROI” means the
sum of (1) the Annual ROI for the three consecutive quarters ending
September 30, 2008, (2) the Annual ROI for the four consecutive quarters ending
September 30, 2009, and (3) the Annual ROI for the four consecutive quarters
ending September 30, 2010.

 

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“Performance Period Net Sales Percentage” or “Performance Period NS%” means the
sum of the (1) the Annual Net Sales for the three consecutive quarters ending
September 30, 2008, (2) the Annual Net Sales for the four consecutive quarters
ending September 30, 2009, and (3) the Annual Net Sales for the four consecutive
quarters ending September 30, 2010 divided by the Baseline Net Sales.

“Relative Net Sales Gains Percentage” or “Relative NSG%” means the Performance
Period Net Sales Percentage of the Company, compared to the other members of the
Peer Group, as determined in good faith by the Committee.

“Relative Return on Investment” or “Relative ROI” means the Performance Period
ROI of the Company, compared to the other members of the Peer Group, as
determined in good faith by the Committee.

“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.

 

  (b) 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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