EXHIBIT 10.1


THE RYLAND GROUP, INC.


2006 NON-EMPLOYEE DIRECTOR STOCK PLAN


1.             Purpose
and Types of Awards


The purpose of The Ryland Group, Inc. 2006
Non-Employee Director Stock Plan (the “Plan”) is to align the interests of the
members of the Board of Directors of the Corporation with the interests of the
Corporation and its stockholders through an equity participation in the value
of the Corporation’s Common Stock.


2.             Definitions


“Award Date” means the date a Participant is
eligible to receive a Stock Award.


“Board” means the Board of Directors of the
Corporation.


“Code” means the Internal Revenue Code of
1986, as amended.


“Committee” means the Compensation Committee
of the Board or such other committee of the Board that is designated by the
Compensation Committee or the Board from time to time to administer the Plan.


“Common Stock” means the Common Stock, $1.00
par value, of the Corporation.


“Corporation” means The Ryland Group, Inc., a
Maryland corporation.


“Director” means a member of the Board.


“EDDCP” means the Corporation’s Executive and
Director Deferred Compensation Plan, as amended from time to time, or any
successor or companion plan, as well as any other non-qualified deferred
compensation plan of the Corporation.


“Effective Date” means the date of the 2006
Annual Meeting of Stockholders of the Corporation, or any adjournment thereof,
provided that the Plan is approved by the stockholders on such date.


“Employee” means any officer or employee of
the Corporation or of its subsidiaries.


“Market Price” means the last reported sale
price of the Common Stock on the New York Stock Exchange; or, if the Common
Stock is not listed on the New York Stock Exchange, the closing price on such
other exchange on which the Common Stock is traded; or, if quoted on the Nasdaq
National Market System or other over-the-counter market, the last reported
sales price on the Nasdaq National Market System or other over-the-counter
market; or, if the Common Stock is not publicly traded, such price as shall be
determined by the Committee to be the fair market value.


“Non-Employee Director” or “Participant”
means a member of the Board who is not at the time also an Employee.


“Securities Act” means the Securities Act of
1933, as amended from time to time.


















 


“Stock Award” means any grant of shares of
Common Stock pursuant to the Plan.


3.             SHARES
OF COMMON STOCK SUBJECT TO THE PLAN


(a)           Subject
to adjustment as provided in Section 3(b) below, the maximum aggregate number
of shares of Common Stock that may be issued under the Plan is 150,000
shares.  The Common Stock issued under
the Plan will come from authorized but unissued shares of Common Stock,
purchases by the Corporation on the open market or from any other proper
source.  The Corporation will set aside
and reserve for issuance under the Plan 150,000 shares of Common Stock.


(b)           In
the event of any stock dividend, stock split, extraordinary cash dividend,
creation of a class of equity securities, recapitalization, reorganization,
merger, consolidation, split-up, spin-off, combination, exchange of shares,
warrants or rights offering to purchase Common Stock at a price below Market
Price or similar change affecting the Common Stock, appropriate adjustment
shall be made in the maximum number and kind of shares subject to the Plan, and
subsequent grants of Stock Awards.


4.             ADMINISTRATION
OF THE PLAN


Stock Award grants under the Plan are
automatic as provided in Section 6.  The
Plan is administered by the Committee. 
The Committee shall have the powers vested in it by the terms of the
Plan.  The Committee shall, subject to
the provisions of the Plan, have the power to construe the Plan, to determine
all questions arising thereunder, and to adopt and amend rules and regulations
for the administration of the Plan. 
Notwithstanding the foregoing, the Committee shall have no discretion
with respect to the eligibility or selection of Participants.  Any decisions of the Committee on the
administration of the Plan shall be final, binding and conclusive.


5.             PARTICIPATION
IN THE PLAN


All Non-Employee Directors shall participate
in the Plan.


6.             STOCK
AWARDS


(a)           Annual
Stock Award Grants.  On May 1, 2006, and
on each May 1st thereafter during the term of the Plan, each Participant on
such date shall receive a Stock Award of 3,000 shares of Common Stock.  Each person who first becomes a Participant
after May 1, 2006 and on a date other than May 1st, shall receive, within 30
days of the date such person is appointed or elected as a Participant, a
pro-rata Stock Award of a number of shares of Common Stock equal to the number,
rounded up to the nearest whole number, determined by multiplying 3,000 shares
by a fraction, (i) the numerator of which is the number of days during the
period measured from the date such person becomes a Participant or is elected
or appointed as a Non-Employee Director until the next following April 30th,
and (ii) the denominator of which is 365.


(b)           Deferral
of Stock Awards.  Participants may elect
to defer receipt of a Stock Award in accordance with the terms and conditions
of the EDDCP.  If a Participant elects to
defer the receipt of payment of the shares of Common Stock subject to a Stock
Award, the number of shares of Common Stock subject to the Stock Award shall be
credited to an EDDCP account on behalf of the Participant, and shall be subject
thereafter to the terms and conditions of the EDDCP.  All deferral elections shall be made in
accordance with the terms and conditions of the EDDCP.


(c)           Cash
Dividend Equivalent Rights in Respect of Deferred Stock Awards.  On each cash dividend payment date with
respect to deferred shares of Common Stock, the Participant shall receive a



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cash dividend equivalent payment in respect
of such deferred Common Stock credited on a pro rata basis to their other
non-Common Stock EDDCP investment account(s).


(d)           Time
of Vesting and Payment of Stock Awards. 
All Stock Awards shall be fully vested and nonforfeitable on the
applicable Award Date.  Unless otherwise
deferred in accordance with Section 6(b), all payments of shares of Common
Stock and transmittal of stock certificates, or other evidence of Common Stock
ownership in relation to Stock Awards will be distributed as soon as
practicable after the Award Date.  The
Corporation shall not issue fractions of a share of Common Stock.  Whenever under the terms of the Plan, a
fractional share of Common Stock is required to be issued, the Participant
shall be paid in cash for such fractional share.


7.             CONTINUATION OF
DIRECTOR OR OTHER STATUS


Nothing in the Plan or in any instrument
executed pursuant to the Plan or any action taken pursuant to the Plan shall be
construed as creating or constituting evidence of any agreement or
understanding, express or implied, that the Corporation will retain a
Participant as a Director or in any other capacity for any period of time or at
a particular retainer or other rate of compensation, as conferring upon any
Participant any legal or other right to continue as a Director or in any other
capacity, or as limiting, interfering with or otherwise affecting the
provisions of the Corporation’s Charter, Bylaws or the Maryland General
Corporation Law relating to the removal of Directors.


8.             COMPLIANCE WITH
GOVERNMENT REGULATIONS


Neither the Plan nor the Corporation shall be
obligated to issue any shares of Common Stock pursuant to the Plan at any time
unless and until all applicable requirements imposed by any federal and state
securities and other laws, rules, and regulations, by any regulatory agencies,
or by any stock exchanges upon which the Common Stock may be listed have been fully
met.  Participants are responsible for
complying with all applicable federal and state securities and other laws,
rules and regulations in connection with any offer, sale or other transfer of
the shares of Common Stock issued under the Plan or any interest therein
including, without limitation, compliance with the registration requirements of
the Securities Act (unless an exemption therefrom is available), or with the
provisions of Rule 144 promulgated thereunder, if available, or any successor
provisions.


9.             TRANSFERABILITY OF
RIGHTS


Except as otherwise determined by the
Committee, no Participant shall have the right to assign any rights or
interests under the Plan, contingent or otherwise, or to cause or permit any
encumbrance, pledge or charge of any nature to be imposed on any such rights or
interests, other than by will or the laws of descent and distribution.


10.           AMENDMENT AND
TERMINATION OF THE PLAN


The Committee may amend, suspend or terminate
the Plan or any portion thereof at any time as it determines appropriate,
without further action by the Corporation’s stockholders, except to the extent
required by applicable law, regulatory agency or stock exchanges upon which the
Common Stock is listed.  The Plan may be
amended by the Committee at any time, retroactively if required, in the opinion
of the Corporation, in order to ensure that the Plan complies with the
requirements of Section 409A of the Code. 
No amendment shall be prejudicial to any interest of a Participant.  If not sooner terminated by the Committee,
the Plan shall terminate on April 25, 2016.



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11.           GOVERNING LAW


The validity, construction and effect of the
Plan, of written instruments entered into pursuant to the Plan, and of any
rules, regulations, determinations or decisions made by the Committee relating
to the Plan or such written instruments, and the rights of any and all persons
having or claiming to have any interest therein or thereunder, shall be
determined exclusively in accordance with applicable federal laws and the laws
of the State of Maryland, without regard to its conflict of laws principles.


12.           APPLICABILITY TO
OTHER PLANS


After and subject to stockholder approval of
this Plan, no further awards shall be granted under the Corporation’s 2004
Non-Employee Director Equity Plan. 
Outstanding awards under the 2004 Non-Employee Director Equity Plan
shall remain in effect pursuant to the terms of the agreements governing such
awards and shall continue to be governed by the 2004 Non-Employee Director
Equity Plan to the extent applicable.


13.           409A SAVINGS CLAUSE


It is intended that the Plan comply with
Section 409A of the Code.  The Plan shall
be administered, interpreted and construed in a manner consistent with such
Code Section.  Should any provision of
this Plan not comply with the provisions of Section 409A of the Code, that
provision shall have no effect on the remaining parts of this Plan and this
Plan shall be construed and enforced as if such provision had never been
inserted herein.



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