def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
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
FORESTAR GROUP INC.
(Name of Registrant as Specified
In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
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:
|
|
|
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.:
|
6300 Bee
Cave Road, Building Two, Suite 500
Austin, Texas 78746
NOTICE OF 2010 ANNUAL MEETING
OF STOCKHOLDERS
To Be Held May 11,
2010
To
Forestar Stockholders:
|
|
|
When and Where the Annual
Meeting
of Stockholders Will be
Held
|
|
The 2010 annual meeting of our
stockholders will be held at our offices located at 6300 Bee
Cave Road, Building Two, Austin, Texas 78746, on Tuesday,
May 11, 2010, at 9:00 a.m. local time.
|
|
Purposes of the
Meeting
|
|
The meeting will be held for the
following purposes:
|
|
|
|
1. To elect the four nominees named
in the attached proxy statement as directors to serve on our
Board of Directors. These four directors will serve as directors
until their terms expire or, if later, until replacement
directors are elected who meet all necessary qualifications.
|
|
|
|
2. To re-approve the material terms
of our 2007 Stock Incentive Plan for purposes of complying with
the requirements of Section 162(m) of the Internal Revenue
Code.
|
|
|
|
3. To ratify the Audit
Committees appointment of Ernst & Young LLP as
our independent registered public accounting firm for the year
2010.
|
|
|
|
4. To transact any other business
that is properly raised for discussion at the annual meeting or
any later meeting if the annual meeting is adjourned or
postponed.
|
|
Who Can Attend and
Vote
|
|
Our Board of Directors has fixed
the close of business on March 15, 2010 as the record date
for determining who is a stockholder entitled to receive notices
about the annual meeting and to vote at the annual meeting or
any later meeting if the annual meeting is adjourned or
postponed. Only stockholders who own stock on the record date
are entitled to receive notices about the annual meeting and to
vote at the annual meeting.
|
If you need help in voting your shares, please call D. F.
King & Co., Inc., our proxy solicitation firm, at
(800) 714-3312.
David M. Grimm
Executive Vice President,
General Counsel and Secretary
March 31, 2010
Austin, Texas
Your vote is important. You are invited to attend the meeting
in person. If you need directions to the meeting location, you
may contact our Corporate Secretary by phone at
(512) 433-5200
or by mail at the address noted above. Whether or not you plan
to attend, and no matter how many shares you own, please mark
your vote on the enclosed proxy card, sign it, date it, and
return it by mail or vote by telephone or on the internet. By
voting before the meeting, you will help us ensure that there
are enough stockholders voting to hold a meeting and avoid added
proxy solicitation costs. If you attend the meeting, you may
vote in person, if you wish, even if you have previously
submitted a proxy. You may revoke your proxy at any time before
the vote is taken by delivering to the Corporate Secretary a
written revocation or a proxy with a later date or by voting
your shares in person at the meeting, in which case your prior
proxy will be disregarded. Please see the instructions under
Questions and Answers About the Annual Meeting
How can I change or revoke my vote?
Important Notice Regarding the Availability of Proxy
Materials for the 2010 Annual Meeting of Stockholders to be held
on May 11, 2010. The 2010 Proxy Statement, along with
our Annual Report on
Form 10-K
for 2009, are available at
http://investor.forestargroup.com/phoenix.zhtml?c=216546&p=irol-irhome.
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
5
|
|
|
|
|
5
|
|
|
|
|
6
|
|
|
|
|
7
|
|
|
|
|
7
|
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
|
10
|
|
|
|
|
10
|
|
|
|
|
11
|
|
|
|
|
11
|
|
|
|
|
12
|
|
|
|
|
12
|
|
|
|
|
12
|
|
|
|
|
12
|
|
|
|
|
13
|
|
|
|
|
14
|
|
|
|
|
14
|
|
|
|
|
15
|
|
|
|
|
15
|
|
|
|
|
16
|
|
|
|
|
16
|
|
|
|
|
17
|
|
|
|
|
17
|
|
|
|
|
17
|
|
|
|
|
17
|
|
i
|
|
|
|
|
|
|
|
18
|
|
|
|
|
18
|
|
|
|
|
18
|
|
|
|
|
19
|
|
|
|
|
19
|
|
|
|
|
19
|
|
|
|
|
19
|
|
|
|
|
20
|
|
|
|
|
20
|
|
|
|
|
20
|
|
|
|
|
21
|
|
|
|
|
21
|
|
|
|
|
22
|
|
|
|
|
22
|
|
|
|
|
26
|
|
|
|
|
26
|
|
|
|
|
27
|
|
|
|
|
27
|
|
|
|
|
27
|
|
|
|
|
27
|
|
|
|
|
28
|
|
|
|
|
28
|
|
|
|
|
28
|
|
|
|
|
28
|
|
|
|
|
28
|
|
|
|
|
28
|
|
|
|
|
29
|
|
|
|
|
29
|
|
|
|
|
29
|
|
|
|
|
30
|
|
|
|
|
30
|
|
|
|
|
30
|
|
|
|
|
31
|
|
|
|
|
31
|
|
|
|
|
31
|
|
|
|
|
32
|
|
|
|
|
32
|
|
|
|
|
34
|
|
|
|
|
35
|
|
|
|
|
36
|
|
|
|
|
39
|
|
|
|
|
39
|
|
|
|
|
40
|
|
|
|
|
43
|
|
|
|
|
43
|
|
|
|
|
43
|
|
ii
|
|
|
|
|
|
|
|
43
|
|
|
|
|
45
|
|
|
|
|
47
|
|
|
|
|
47
|
|
|
|
|
47
|
|
|
|
|
48
|
|
|
|
|
48
|
|
|
|
|
48
|
|
|
|
|
50
|
|
|
|
|
50
|
|
|
|
|
50
|
|
|
|
|
50
|
|
iii
6300 Bee
Cave Road, Building Two, Suite 500
Austin, Texas 78746
PROXY STATEMENT
FOR 2010 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING
How are
we asking for your vote?
Our Board of Directors seeks your proxy for use in voting at our
2010 annual meeting of stockholders to be held on Tuesday,
May 11, 2010, at 9:00 a.m., local time, and at any
later meeting if the annual meeting is adjourned or postponed.
This proxy statement and proxy card were mailed beginning on
March 24, 2010 to all holders of our common stock entitled
to vote at the annual meeting.
We have enclosed with this proxy statement our 2010 Annual
Report to Stockholders, which includes our audited financial
statements. The Annual Report does not constitute any part of
the material for the solicitation of proxies.
Who is
entitled to vote at the annual meeting?
Holders of our common stock as of the close of business on
March 15, 2010, the record date, may vote at the 2010
annual meeting, either in person or by proxy. At the close of
business on March 15, 2010, there were
36,390,983 shares of our common stock outstanding and
entitled to vote at the annual meeting. The common stock is our
only authorized voting security, and each share of our common
stock is entitled to one vote on each matter properly brought
before the annual meeting.
What
matters will be voted on at the annual meeting?
At the annual meeting, the stockholders will be asked to vote on
the following proposals:
Proposal No. 1: To elect the four
nominees named in this proxy statement as directors to serve on
our Board of Directors. These four directors will serve as
directors until their terms expire or, if later, until
replacement directors are elected who meet all necessary
qualifications.
Proposal No. 2: To re-approve the
material terms of our 2007 Stock Incentive Plan for purposes of
complying with the requirements of Section 162(m) of the
Internal Revenue Code.
Proposal No. 3: To ratify the Audit
Committees appointment of Ernst & Young LLP as
our independent registered public accounting firm for the year
2010.
What is
the difference between holding shares as a stockholder of record
and as a beneficial owner?
If your shares are registered directly in your name with our
transfer agent, Computershare Trust Company, N.A., you are
considered the stockholder of record with respect to
those shares. This proxy statement, the enclosed proxy card and
the 2010 Annual Report to Stockholders have been sent directly
to you.
If your shares are held in a stock brokerage account or by a
bank or other nominee, those shares are held in street
name and you are considered the beneficial
owner of the shares. The proxy statement, the 2010 Annual
Report to Stockholders and other materials have been forwarded
to you by your broker, bank or other nominee, who is the
stockholder of record. You will receive separate instructions
from your broker, bank or other holder of record describing how
to vote your shares.
How can I
vote my shares before the annual meeting?
If you hold shares in your own name as a stockholder of record,
you can cast your vote before the annual meeting by authorizing
the individuals named on the enclosed proxy card to serve as
your proxy to vote your shares at the annual meeting in the
manner you indicate. You may do so by completing, signing and
dating the
1
enclosed proxy card and returning it in the enclosed
postage-paid envelope. The telephone and internet voting
instructions serve the same purpose as the proxy card. When your
proxy card or telephone or internet vote specifies a choice with
respect to a voting matter, the named individuals on the proxy
card will vote your shares as you have specified. Submitting a
proxy or voting through the telephone or the internet will not
affect your right to attend the annual meeting and vote in
person.
If you are a beneficial owner of shares held in street name,
your broker, bank or other nominee will provide you with
materials and instructions for voting your shares. The
availability of telephone or internet voting will depend on the
banks or brokers voting process. Please check with
your bank or broker and follow the voting procedures your bank
or broker provides to vote your shares.
How will
my shares be voted if I give my proxy but do not specify how my
shares should be voted?
If your shares are held in your own name as a stockholder of
record and you return your signed proxy card but do not specify
a voting choice on your proxy card, your shares will be voted as
follows:
|
|
|
|
|
FOR election of the director nominees under the caption
Election of Directors.
|
|
|
|
FOR re-approval of the material terms of our 2007 Stock
Incentive Plan for purposes of complying with the requirements
of Section 162(m) of the Internal Revenue Code.
|
|
|
|
FOR ratification of the selection of Ernst & Young LLP
as independent registered public accounting firm for the year
2010.
|
If I am
the beneficial owner of shares held in street name by my broker,
will my broker automatically vote my shares for me if I do not
instruct my broker how to vote my shares?
In the past, brokers had discretionary authority to vote in the
election of directors if they did not receive instructions from
a beneficial owner. Due to a New York Stock Exchange
(NYSE) rule change, brokers do not have this
discretionary authority effective January 1, 2010. In
addition, brokers do not have discretionary authority to vote on
the proposal to re-approve the material terms of our 2007 Stock
Incentive Plan for Section 162(m) purposes.
Accordingly, if you are a beneficial owner, you must
instruct your broker on how you want your shares to be voted on
the election of directors and the re-approval of the 2007 Stock
Incentive Plan in order for your votes to be counted on these
proposals. Brokers do have discretionary authority to
vote on the ratification of selection of auditors if they do not
receive instructions from a beneficial owner.
Can I
vote in person at the annual meeting?
Yes. If you hold shares in your own name as a stockholder of
record, you are invited to attend the annual meeting and cast
your vote at the meeting by properly completing and submitting a
ballot at the meeting. If you are the beneficial owner of shares
held in the name of your broker, bank or other nominee, you are
invited to attend the meeting in person, but in order to vote at
the meeting you must first obtain a legal proxy from your
broker, bank or other nominee giving you the right to vote those
shares and submit that proxy along with a properly completed
ballot at the meeting.
How can I
change or revoke my vote?
If you hold shares in your own name as a stockholder of record,
you may change your vote or revoke your proxy at any time before
voting begins by:
|
|
|
|
|
giving written notice of revocation to our Corporate Secretary
at any time before the voting begins; or
|
|
|
|
signing and delivering a proxy that is dated after the proxy you
wish to revoke; or
|
|
|
|
attending the annual meeting and voting in person by properly
completing and submitting a ballot.
|
2
(Attendance at the meeting, in and of itself, will not cause
your previously granted proxy to be revoked unless you vote at
the meeting.)
We must receive your notice of revocation or later dated proxy
at or prior to voting at the annual meeting for it to be
effective. It should be delivered to:
Forestar Group Inc.
6300 Bee Cave Road, Building Two, Suite 500
Austin, Texas 78746
Attention: David M. Grimm, Corporate Secretary
Alternatively, you may hand deliver a written revocation notice,
or a later dated proxy, to the Corporate Secretary at the annual
meeting before the voting begins.
If you are the beneficial owner of your shares held in street
name, please check with your bank or broker and follow the
procedures your bank or broker provides if you wish to change
your vote.
What is
the quorum for the annual meeting and what happens
if a quorum is not present?
The presence at the annual meeting, in person or by proxy, of
holders of 18,195,492 shares (a majority of the number of
shares of common stock issued and outstanding and entitled to
vote as of the record date) is required to constitute a quorum
to transact business at the meeting. Proxies marked
abstain and broker non-votes (each of
which are explained below) will be counted in determining the
presence of a quorum.
If the shares present in person or represented by proxy at the
annual meeting are not sufficient to constitute a quorum, the
stockholders by a vote of the holders of a majority of the votes
entitled to be cast by the stockholders, present in person or by
proxy at the meeting (which may be voted by the proxyholders at
the meeting), may, without further notice to any stockholder
(unless a new record date is set or the adjournment is for more
than 30 days), adjourn the meeting to a different time and
place to permit further solicitations of proxies sufficient to
constitute a quorum. At any such adjourned meeting at which a
quorum may be present, any business may be transacted that might
have been transacted at the meeting as originally called.
What is
an abstention and how would it affect the
vote?
An abstention occurs when a stockholder sends in a proxy with
explicit instructions to decline to vote regarding a particular
proposal. An abstention with respect to any proposal for the
annual meeting will not be counted as a vote cast
for or against the proposal. Consequently, an abstention with
respect to any of the proposals scheduled for a vote at the
annual meeting will not affect the outcome of the vote.
What is a
broker non-vote and how would it affect the
vote?
Broker non-votes are shares held by brokers or
nominees for which voting instructions have not been received
from the beneficial owners or the persons entitled to vote those
shares and the broker or nominee does not have discretionary
voting power under rules applicable to broker-dealers so the
broker is unable to vote those uninstructed shares. A broker
non-vote with respect to a proposal will not be
counted as a vote cast for or against the proposal.
Consequently, a broker non-vote will not affect the
outcome of the vote.
What are
the voting requirements to elect directors and approve the
proposals described in the proxy statement?
Election
of Directors
A plurality of the total number of votes cast by stockholders
entitled to vote at the annual meeting is required for the
election of each director nominee named in
Proposal No. 1. This means that the four director
nominees who receive the largest number of votes cast in favor
of their election as directors are elected as directors. Any
shares not voted (whether by abstention, broker non-vote or
otherwise) will not be counted as votes cast and will have no
effect on the outcome of the vote. Stockholders may not cumulate
votes in the election of directors.
3
Re-Approval
of Material Terms of 2007 Stock Incentive Plan for
Section 162(m) Purposes
The affirmative vote of a majority of the votes cast by the
stockholders entitled to vote and present in person or
represented by proxy at the annual meeting is required to
re-approve the material terms of our 2007 Stock Incentive Plan
for purposes of complying with the requirements of
Section 162(m) of the Internal Revenue Code in
Proposal No. 2. Any shares not voted (whether by
abstention, broker non-vote or otherwise) will not be counted as
votes cast and will have no effect on the outcome of the vote.
Ratification
of Auditors
The affirmative vote of a majority of the votes cast by
stockholders entitled to vote and present in person or
represented by proxy at the annual meeting is required for the
ratification of the appointment of our independent registered
public accounting firm in Proposal No. 3. Any shares
not voted (whether by abstention or otherwise) will not be
counted as votes cast and will have no effect on the outcome of
the vote.
Who will
conduct and pay for the proxy solicitation?
The company is soliciting your proxy for the annual meeting and
will pay all the costs of the proxy solicitation process. We
have retained D.F. King & Co., Inc., a professional
proxy solicitation firm, to assist in the solicitation of
proxies. D.F. Kings employees and our directors, officers
and employees may solicit the return of proxies by personal
contact, mail, electronic mail, facsimile, telephone or the
internet. We may also issue press releases asking for your vote
or post letters or notices to you on our website,
www.forestargroup.com . Our directors, officers and
employees will not receive additional compensation, but will be
reimbursed for
out-of-pocket
expenses. D.F. King will be reimbursed for its expenses in
soliciting proxies and, in addition, will receive a proxy
solicitation fee not to exceed $7,000. We will request brokerage
houses and other custodians, nominees and fiduciaries to forward
solicitation material to the beneficial owners of our common
stock. We will reimburse them for
out-of-pocket
costs they incur in the solicitation.
Who will
count the votes?
Representatives of our transfer agent, Computershare, will
tabulate the votes and act as inspectors of election to certify
the results.
What is
our confidential voting policy?
We have adopted a confidential voting policy which provides that
stockholder proxies, ballots, and voting tabulations that
identify your vote will not be disclosed to our directors,
officers, or employees. There are a few exceptions to this
policy, such as when you make a comment on your proxy vote or
when we must determine the legality of a vote.
SPIN-OFF
Prior to December 28, 2007, we were a wholly-owned
subsidiary of Temple-Inland Inc. On December 28, 2007,
Temple-Inland distributed all of the issued and outstanding
shares of our common stock to the holders of record of
Temple-Inland common stock as of the close of business on
December 14, 2007, which we will refer to in this proxy
statement as the spin-off or the
separation.
4
VOTING
SECURITIES AND PRINCIPAL STOCKHOLDERS
Security
Ownership of Certain Beneficial Owners
The name, address and stock ownership of each person or group of
persons known by us to own beneficially more than five percent
of the outstanding shares of our common stock as of the close of
business on March 15, 2010 follows.
|
|
|
|
|
|
|
|
|
Name and Address
|
|
Amount and Nature of
|
|
Percent
|
of Beneficial Owner
|
|
Beneficial Ownership
|
|
of Class(1)
|
|
BlackRock Inc.(2)
|
|
|
4,821,708
|
|
|
|
13.25
|
%
|
40 East 52nd Street
New York, New York 10022
|
|
|
|
|
|
|
|
|
FMR LLC(3)
|
|
|
3,152,329
|
|
|
|
8.66
|
%
|
85 Devonshire Street
Boston, Massachusetts 02109
|
|
|
|
|
|
|
|
|
Keeley Asset Management Corp. and John L. Keeley, Jr.(4)
|
|
|
2,389,352
|
|
|
|
6.56
|
%
|
401 South LaSalle Street
Chicago, Illinois 60605
|
|
|
|
|
|
|
|
|
Franklin Mutual Advisors, LLC(5)
|
|
|
2,323,852
|
|
|
|
6.38
|
%
|
101 John F. Kennedy Parkway
Short Hills, New Jersey
07078-2789
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based upon a total of 36,390,983 shares of common stock
outstanding on March 15, 2010. |
|
(2) |
|
Based solely on information reported on Schedule 13G filed
with the SEC on January 8, 2010 by BlackRock Inc. According
to the Schedule 13G, BlackRock, Inc. has the sole voting
power, the sole dispositive power and beneficial ownership over
4,821,708 shares. |
|
(3) |
|
Based solely on information reported on Schedule 13G filed
with the SEC on February 17, 2009, as amended by the
Schedule 13G/A filed on February 16, 2010, by FMR LLC.
The Schedule 13G indicates that Fidelity
Management & Research Company (Fidelity),
a wholly-owned subsidiary of FMR LLC and an investment adviser
registered under Section 203 of the Investment Advisers Act
of 1940 (the 1940 Act), is the beneficial owner of
3,114,929 shares as a result of acting as investment
adviser to various investment companies registered under
Section 8 of the 1940 Act. According to the
Schedule 13G, Edward C. Johnson III (chairman of FMR
LLC) and FMR LLC, through their control of Fidelity, each
has sole power to dispose of the 3,114,929 shares, are the
predominant owners, either directly or through trusts, of
Series B voting common shares of FMR LLC, representing 49%
of the voting power of FMR LLC. Also according to the
Schedule 13G, members of the family of Edward C.
Johnson III family group and all other series B
shareholders have entered into a shareholders voting
agreement under which all series B voting common shares
will be voted in accordance with the majority vote of
series B voting common shares. Thus, according to the
Schedule 13G, members of the Johnson family may be deemed
under the 1940 Act to form a controlling group with respect to
FMR LLC. Finally, according to the Schedule 13G, neither
FMR LLC nor Mr. Johnson has the sole power to vote or
direct the voting of the shares, which power resides with the
Fidelity funds board of trustees, which carries out the voting
under written guidelines established by the board of trustees. |
|
(4) |
|
Based solely on information reported on Schedule 13G/A
filed with the SEC on February 12, 2010 by Keeley Asset
Management Corp. and John L. Keeley, Jr. According to the
Schedule 13G/A, Keeley Asset Management Corp. has the sole
voting power over 2,304,121 shares and has the sole
dispositive power over 2,389,352 shares. The
Schedule 13G also reflects that Mr. Keeley
beneficially owns 112,500 shares. |
|
(5) |
|
Based solely on information reported on Schedule 13G/A
filed with the SEC on January 22, 2010 by Franklin Mutual
Advisers, LLC (FMA). The Schedule 13G/A
indicates that the reported shares of common stock are
beneficially owned by one or more open-end investment companies
or other accounts that, pursuant to investment management
contracts, are managed by FMA, which is an indirect wholly-owned
subsidiary of Franklin Resources, Inc. (FRI).
According to the Schedule 13G/A, these investment
management contracts grant to FMA all investment and voting
power over the securities owned by the investment |
5
|
|
|
|
|
management clients, and the voting and investment powers held by
FMA are exercised independently from FRI and from all other
investment management subsidiaries of FRI. Also according to the
Schedule 13G/A,
internal policies and procedures of FMA and FRI establish
informational barriers that prevent the flow between FMA and the
FRI affiliates of information that relates to the voting and
investment powers over the securities owned by their respective
investment management clients. The Schedule 13G/A states
that Charles B. Johnson and Rupert H. Johnson, Jr. each own in
excess of 10% of the outstanding common stock of FRI and are the
principal stockholders of FRI. However, according to the
Schedule 13G/A, because FMA exercises voting and investment
powers on behalf of its investment management clients
independently of FRI, such individuals beneficial
ownership of the reported securities is being attributed only to
FMA. FMA disclaims beneficial ownership of the reported shares.
The Schedule 13G/A also states that FMA believes that it is
not a group with FRI, such individuals, or their
respective affiliates within the meaning of
Rule 13d-5
under the Securities Exchange Act of 1934. |
Security
Ownership of Management
The following table sets forth information regarding the
beneficial ownership of our common stock as of March 15,
2010 by:
|
|
|
|
|
Each of our directors and nominees for director, including our
Chief Executive Officer,
|
|
|
|
Our Chief Financial Officer and our three most highly
compensated executive officers other than our CEO and
CFO, and
|
|
|
|
all directors and executive officers as a group.
|
We determined beneficial ownership as reported in the table in
accordance with
Rule 13d-3
under the Securities Exchange Act of 1934, as amended (which we
will refer to in this proxy statement as the Exchange Act).
Unless otherwise indicated, beneficial ownership includes both
sole voting and sole dispositive power. Even though SEC rules
require reporting of all the shares listed in the table, the
directors and executive officers do not claim beneficial
ownership of all of these shares. For example, a director or
executive officer might not claim ownership of shares owned by a
relative. Unless otherwise indicated, the table does not include
any shares that may be held by pension and profit-sharing plans
of the corporations or endowment funds of educational and
charitable institutions for which various directors and officers
serve as directors or trustees.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Ownership(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Shares Issuable
|
|
|
|
|
|
|
|
|
Units and
|
|
|
|
|
|
Beneficial
|
|
|
|
|
|
|
|
|
|
on Exercise
|
|
|
|
|
|
|
|
|
Phantom Shares
|
|
|
Total
|
|
|
and
|
|
|
|
Beneficial Ownership
|
|
|
of Options
|
|
|
Stock
|
|
|
Restricted
|
|
|
Payable upon
|
|
|
Additional
|
|
|
Additional
|
|
|
|
Amount and
|
|
|
Percent of
|
|
|
on or after
|
|
|
Appreciation
|
|
|
Stock Units
|
|
|
Retirement
|
|
|
Ownership
|
|
|
Ownership
|
|
Beneficial Owner
|
|
Nature(1)(2)(3)(4)
|
|
|
Class
|
|
|
May 15, 2010
|
|
|
Rights(6)
|
|
|
(7)
|
|
|
(8)
|
|
|
(d+e+f+g)
|
|
|
(b+h)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
Non-Employee Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth M. Jastrow, II
|
|
|
360,660
|
|
|
|
|
*
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
12,286
|
|
|
|
19,286
|
|
|
|
379,946
|
|
Louis R. Brill
|
|
|
40,934
|
|
|
|
|
*
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
19,705
|
|
|
|
26,705
|
|
|
|
67,639
|
|
Kathleen Brown
|
|
|
22,995
|
|
|
|
|
*
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
20,392
|
|
|
|
27,392
|
|
|
|
50,387
|
|
William G. Currie
|
|
|
21,209
|
|
|
|
|
*
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
19,489
|
|
|
|
26,489
|
|
|
|
47,698
|
|
Michael E. Dougherty
|
|
|
26,709
|
|
|
|
|
*
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
19,517
|
|
|
|
26,517
|
|
|
|
53,226
|
|
James A. Johnson
|
|
|
29,997
|
|
|
|
|
*
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
37,047
|
|
|
|
44,047
|
|
|
|
74,044
|
|
Thomas H. McAuley(9)
|
|
|
22,514
|
|
|
|
|
*
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
20,260
|
|
|
|
27,260
|
|
|
|
49,774
|
|
William Powers, Jr.
|
|
|
22,907
|
|
|
|
|
*
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
20,101
|
|
|
|
27,101
|
|
|
|
50,008
|
|
James A. Rubright
|
|
|
23,809
|
|
|
|
|
*
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
24,078
|
|
|
|
31,078
|
|
|
|
54,887
|
|
Richard M. Smith
|
|
|
28,135
|
|
|
|
|
*
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
20,746
|
|
|
|
27,746
|
|
|
|
55,881
|
|
Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James M. DeCosmo
|
|
|
201,028
|
|
|
|
|
*
|
|
|
114,812
|
|
|
|
168,929
|
|
|
|
67,660
|
|
|
|
|
|
|
|
351,401
|
|
|
|
552,429
|
|
Christopher L. Nines
|
|
|
70,592
|
|
|
|
|
*
|
|
|
35,718
|
|
|
|
52,032
|
|
|
|
18,481
|
|
|
|
|
|
|
|
106,231
|
|
|
|
176,823
|
|
Craig A. Knight
|
|
|
132,681
|
|
|
|
|
*
|
|
|
76,005
|
|
|
|
96,847
|
|
|
|
33,321
|
|
|
|
|
|
|
|
206,173
|
|
|
|
338,854
|
|
David M. Grimm
|
|
|
67,920
|
|
|
|
|
*
|
|
|
35,612
|
|
|
|
52,032
|
|
|
|
18,481
|
|
|
|
|
|
|
|
106,125
|
|
|
|
174,045
|
|
Charles D. Jehl
|
|
|
62,587
|
|
|
|
|
*
|
|
|
35,612
|
|
|
|
52,032
|
|
|
|
18,481
|
|
|
|
|
|
|
|
106,125
|
|
|
|
168,712
|
|
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors and executive officers (19 persons) as a group
|
|
|
1,303,528
|
|
|
|
3.58
|
%
|
|
|
441,563
|
|
|
|
527,486
|
|
|
|
202,613
|
|
|
|
213,621
|
|
|
|
1,385,283
|
|
|
|
2,688,811
|
|
6
|
|
|
* |
|
Less than one percent based upon a total of
36,390,983 shares of common stock outstanding on
March 15, 2010. |
|
(1) |
|
Includes shares of our common stock issuable upon exercise of
options exercisable within 60 days from March 15,
2010: Mr. Jastrow 183,831;
Mr. Brill 21,332; Ms. Brown
13,000; Mr. Currie 13,000;
Mr. Dougherty 13,000;
Mr. Johnson 18,331;
Mr. McAuley 13,000; Mr. Powers
13,000; Mr. Rubright 13,000;
Mr. Smith 19,666; Mr. DeCosmo
74,012; Mr. Nines 21,724;
Mr. Knight 56,265; Mr. Grimm
20,696 and Mr. Jehl 19,396; and all directors
and executive officers (19 persons) as a group
550,642. |
|
(2) |
|
Includes shares of our common stock held by trustees under the
Temple-Inland plans for Messrs. Jastrow 3,787;
DeCosmo 547; Nines 367; and
Grimm 526; and all directors and executive officers
(19 persons) as a group 5,705. SEC rules
consider these shares to be beneficially owned. |
|
(3) |
|
Includes 1,067 shares of our common stock owned by
relatives of all directors and executive officers
(19 persons) as a group. SEC rules consider these shares to
be beneficially owned, but the individuals disclaim any
beneficial interest in such shares. |
|
(4) |
|
Includes shares of our common stock representing restricted
stock awards, which shares are issued and outstanding and which
the person is entitled to vote, but which are held in escrow by
us pending vesting of such awards: Mr. DeCosmo
117,109; Mr. Nines 44,508;
Mr. Knight 70,345; Mr. Grimm
45,238 and Mr. Jehl 42,991; and all directors
and executive officers (19 persons) as a group
536,110. |
|
(5) |
|
Additional Ownership is not included in the
SECs definition of Beneficial Ownership. |
|
(6) |
|
Stock appreciation rights vest 25% on each of the first four
anniversaries of the date of grant and are payable in cash. |
|
(7) |
|
Restricted stock units generally vest on the third anniversary
of the date of grant if minimum return on asset (ROA) criteria
are met. Restricted stock units will be settled in cash. |
|
(8) |
|
Includes (a) shares of our common stock underlying the
annual restricted stock units granted to directors under our
director compensation program, and (b) shares of our common
stock underlying restricted stock units granted in connection
with the election to defer directors fees into restricted
stock units under our director fee deferral plan. The restricted
stock units are payable in cash or stock, as determined at the
time of grant, upon the holders retirement. In addition,
under the Temple-Inland director fee deferral plan, director
fees could be deferred into phantom shares. Mr. Johnson
held Temple-Inland phantom shares and in connection with our
spin-off received phantom shares in respect of our common stock.
Under the Temple-Inland director fee deferral plan, phantom
shares deferred through 2005 are payable in shares of common
stock at retirement, and phantom shares deferred in 2006 and
later are payable in cash at retirement based on the stock price
on the date of payment. Mr. Johnson holds 16,009 phantom
shares. Mr. Johnson retired from the Temple-Inland board of
directors in November 2007, and his phantom shares are being
paid in cash and stock in fifteen annual installments commencing
November 2007. |
|
(9) |
|
Mr. McAuley notified the Board of a change in job status
and, in accordance with our Corporate Governance Guidelines,
tendered his resignation. On March 20, 2010, our Board
accepted his resignation. |
Section 16(a)
Beneficial Ownership Reporting Compliance
We have not identified any person who failed to file on a timely
basis reports required by Section 16(a) of the Exchange Act
in respect of our common stock during the most recent fiscal
year. For purposes of identifying persons who failed to timely
file Section 16(a) reports, we only reviewed Forms 3,
4, and 5, amendments to these forms, and written representations
supplied to us in lieu of Form 5 under the SECs
Section 16 rules for the most recent fiscal year.
ELECTION
OF DIRECTORS
Our Bylaws specify that our Board of Directors will establish by
vote how many directors will serve on the Board (but not less
than three). Our Bylaws also provide that the directors will be
divided into three classes,
7
which will as nearly as possible be equal in size. Our Board of
Directors has set the number of directors at eleven, with one
class of three directors and two classes of four directors each.
One of our directors, Thomas H. McAuley, notified the Board of a
change in job status and, in accordance with our Corporate
Governance Guidelines, tendered his resignation. On
March 20, 2010, our Board accepted his resignation. As a
result, currently there are ten members serving on our Board and
there exists a vacancy in the class of directors elected to
serve until the 2011 annual stockholders meeting. Our Board
intends to fill this vacancy.
Each director nominee will be elected by a plurality of the
votes cast at a meeting at which a quorum is present. Plurality
means that the individuals who receive the largest number of
votes cast are elected as directors up to the maximum number of
directors to be chosen at the meeting. Any shares not voted
(whether by abstention, broker non-votes or otherwise) have no
impact on the election of directors.
Director
Qualifications
Our Nominating and Governance Committee is charged with assuring
that the proper skills and experience are represented on our
board. Our corporate governance guidelines include a
non-exclusive list of qualifications that should be considered
in reviewing director candidates. The qualifications take into
account our business, geographic locations, diversity of
backgrounds and skills, and other factors. We expect all our
directors to possess the highest personal and professional
ethics, integrity and values. We also expect our directors to be
committed to the long-term interests of our stockholders as a
whole as distinguished from the specific interest of any
particular stockholder.
Nominees
Unless you specify otherwise on your proxy, the persons named as
proxies in such proxy intend to vote for the election of the
nominees listed below to serve as directors.
All of the nominees are standing for election as directors to
serve for a term of three years expiring at the 2013 annual
meeting of stockholders, or until their replacements are duly
elected and meet all requirements. All nominees are presently
serving as directors. After review of their qualifications, the
Nominating and Governance Committee recommended them as nominees
to the full Board, and the full Board subsequently voted
unanimously to recommend them to the stockholders as nominees.
We did not pay a fee to any third party to identify or evaluate
or to assist in identifying or evaluating potential nominees.
Each of the nominees has consented to being named in this Proxy
Statement and to serve if elected. If any nominee becomes
unavailable to serve, however, the persons named as proxies in
the enclosed form of proxy intend to vote the shares represented
by the proxy for the election of such other person or persons as
may be nominated or designated by management, unless they are
directed by the proxy to do otherwise.
A brief summary of each directors principal occupation,
recent professional experience, certain specific qualifications
considered by the Nominating and Governance Committee and the
Board, and directorships at other public companies in the past
five years, if any, is provided below.
Nominees
for Directors to be Elected at the 2010 Annual Meeting of
Stockholders to Serve Until 2013
|
|
|
Name and Year First
|
|
|
Elected Director
|
|
Principal Occupation and Other Information
|
|
James M. DeCosmo
2007
|
|
Mr. DeCosmo, age 51, has served as our President and Chief
Executive Officer since 2006. He served as Group Vice President
of Temple-Inland from 2005 to 2007, and previously served as
Vice President, Forest from 2000 to 2005 and as Director of
Forest Management from 1999 to 2000. Prior to joining
Temple-Inland Inc., he held various land management positions
throughout the Southeastern United States.
|
|
|
As our CEO, Mr. DeCosmo has demonstrated dedicated and effective
leadership of our operations and business strategy.
|
8
|
|
|
Name and Year First
|
|
|
Elected Director
|
|
Principal Occupation and Other Information
|
|
Kenneth M. Jastrow, II
2007
|
|
Mr. Jastrow, age 62, became Non-Executive Chairman of our Board
upon the completion of our spin-off in 2007. Mr. Jastrow served
as Chairman of the Board and Chief Executive Officer of
Temple-Inland Inc. from 2000 to 2007, and in various other
capacities since 1991, including President, Chief Operating
Officer, Chief Financial Officer, and Group Vice President. Mr.
Jastrow also serves on the Boards of MGIC Investment
Corporation, KB Home, and Genesis Energy, L.P. He previously
served as a director of Guaranty Financial Group, Inc.
|
|
|
Mr. Jastrow has significant public company management and board
leadership experience. He also has experience in the paper and
packaging, building products and financial services industries,
providing critical perspective in businesses that impact the
real estate industry, and a substantial presence in Texas, a key
market for us.
|
James A. Johnson
2007
|
|
Mr. Johnson, age 66, is Vice Chairman of Perseus LLC, a merchant
bank and private equity fund management firm, which Mr. Johnson
joined in 2001. Mr. Johnson served as Chairman and Chief
Executive Officer of Johnson Capital Partners until 2001, as
Chairman of the Executive Committee of the Board of Fannie Mae
in 1999 and as Chairman and Chief Executive Officer of Fannie
Mae from 1991 through 1998. He also serves on the Boards of
Target Corporation and Goldman Sachs Group, Inc. He previously
served as a director of Temple-Inland Inc., UnitedHealth Group
Incorporated, and KB Home.
|
|
|
Mr. Johnson is a recognized expert in housing and housing
markets, and has extensive board leadership experience.
|
Richard M. Smith
2007
|
|
Mr. Smith, age 64, is Chairman of Newsweek, a position he has
held since 1998. Mr. Smith served as Editor-in-Chief of Newsweek
from 1984 to 2007 and CEO from 1991 until 2007. Mr. Smith was
Chairman of the Magazine Publishers of America from 1996 to 1997
and was the founding Chairman of the MPAs New Media
Committee. Mr. Smith continues to serve on the MPAs board
and previously served on the board of the American Society of
Magazine Editors. He also serves on the board of Temple-Inland
Inc.
|
|
|
Mr. Smith has substantial knowledge of and insights into current
trends and events, including their potential impacts on our
businesses and customers.
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
ELECTION OF MR. DECOSMO, MR. JASTROW, MR. JOHNSON AND MR. SMITH
AS DIRECTORS OF FORESTAR.
9
Continuing
Directors
The following information is provided with respect to directors
who will continue to serve as directors until the expiration of
their terms.
Directors
to Serve Until the 2011 Annual Meeting of Stockholders
|
|
|
Name and Year First
|
|
|
Elected Director
|
|
Principal Occupation and Other Information
|
|
Kathleen Brown
2007
|
|
Ms. Brown, age 64, currently serves as Senior Advisor, Goldman,
Sachs & Co., where she heads the Western Region of the
Public Sector and Infrastructure Group. She joined Goldman,
Sachs & Co in 2001. Ms. Brown served as Treasurer of the
State of California from 1991 through 1994. Her private sector
experience includes work as an attorney with the law firm of
OMelveny & Myers and service as President of the
Private Bank at Bank of America. Ms. Brown was the
Democratic Party nominee for Governor of California in 1994,
co-chair of the Presidential Commission on Capital Budgeting,
and a board member of the Los Angeles Unified School District.
She currently serves on the board of the Climate Action Reserve
and the Advisory Board of the Keston Institute and the Public
Policy Institute of California. Ms. Brown formerly served as a
director of Countrywide Bank, N.A.
|
|
|
Ms. Brown has several years of experience in lending and credit,
key drivers of housing demand. She also has government and
industry relationships relevant to our western markets.
|
Michael E. Dougherty
2008
|
|
Mr. Dougherty, age 69, is the founder and Chairman of Dougherty
Financial Group LLC, which was formed in 1977. He also controls
and operates several asset management, securities and commercial
lending businesses, including Galway Bay Investments, Dougherty
Management Company, Inc., Segall Bryant & Hamill, Lakeside
Investment Partners LLC and The Clifton Group Investment
Management Company. Mr. Dougherty has holdings in Dougherty
Funding LLC, Dougherty Mortgage LLC, Dougherty Equipment Finance
LLC and Somerest Asset Management LLC. Mr. Dougherty was
the Chairman of Public Securities Association in 1991 and 1992,
and he previously served on the board of directors of
Countrywide Bank, N.A. He currently serves as a director of
Carol Health Corporation and the University of Minnesota
Physicians. Mr. Dougherty is also a trustee of the University of
St. Thomas, St. Paul, Minnesota.
|
|
|
Mr. Dougherty has over 35 years experience in finance,
asset management, commercial lending and securities, including
experience starting and running new companies.
|
William C. Powers, Jr.
2007
|
|
Mr. Powers, age 63, has been President of the University of
Texas at Austin since 2006. He is also a University
Distinguished Teaching Professor and holds the Hines H. Baker
and Thelma Kelley Baker Chair in Law at The University of Texas
School of Law, where he served as Dean from 2000 to 2005. Other
university appointments have been with the Southern Methodist
University School of Law, the University of Michigan School of
Law, and the University of Washington School of Law. He served
as chair of the Special Investigation Committee, Enron Corp.,
which in 2002 produced the Powers Report.
|
|
|
Mr. Powers has legal and management expertise, including special
expertise in the evaluation and management of risk.
|
10
Directors
to Serve Until the 2012 Annual Meeting of Stockholders
|
|
|
Name and Year First
|
|
|
Elected Director
|
|
Principal Occupation and Other Information
|
|
Louis R. Brill
2007
|
|
Mr. Brill, age 68, served as Chief Accounting Officer of
Temple-Inland from 2000 until his retirement in 2006. In such
capacity, he was in charge of accounting and SEC reporting, and
had oversight responsibilities for the internal audit and tax
functions. From 1976 until his retirement in 1999, he was a
partner of Ernst & Young LLP where he was responsible for
audit clients in a wide range of industries and was managing
partner of its Austin and San Antonio offices. Previously
he was a director of Prodigy Communications and was chairman of
its audit committee.
|
|
|
Mr. Brill has extensive knowledge of public company audit,
accounting and SEC reporting requirements, and internal audit
and tax matters.
|
William G. Currie
2007
|
|
Mr. Currie, age 62, has had a 35-plus year career with Universal
Forest Products, Inc., one of the United States leading
manufacturers and distributors of wood and wood-alternative
products. From 1989 to 2009 he served as Chief Executive Officer
and since 2006 he has served as Chairman of the Board of
Universal Forest Products, previously serving as Vice Chairman
from 2000 to 2006.
|
|
|
Mr. Currie has extensive knowledge of building materials
markets, which are highly relevant to housing, and many years of
public company management and board leadership experience.
|
James A. Rubright
2007
|
|
Mr. Rubright, age 63, is Chairman of the Board and Chief
Executive Officer of Rock-Tenn Company, one of North
Americas leading manufacturers of paperboard,
containerboard and consumer and corrugated packaging. Mr.
Rubright joined Rock-Tenn Company as Chief Executive Officer in
1999. Previously, he served as Executive Vice President of Sonat
Inc. in Birmingham, Alabama, overseeing its interstate natural
gas pipeline and energy marketing businesses. Prior to joining
Sonat Inc. he was a partner at the law firm of King &
Spalding LLP in Atlanta, Georgia. Mr. Rubright also serves on
the board of AGL Resources Inc., an energy company. Mr. Rubright
was formerly a director of Oxford Industries, Inc.
|
|
|
Mr. Rubright has significant experience in public company
management and board leadership. He also has special expertise
related to oil and gas industry operations.
|
How
Nominees Are Selected
Our Nominating and Governance Committee selects nominees on the
basis of recognized achievements and their ability to bring
various skills and experience to the deliberations of our Board,
as described in more detail in the Corporate Governance
Guidelines available on our website at www.forestargroup.com
under the Investor Relations Corporate
Governance section of our website. The Corporate
Governance Guidelines encourage board membership composed of
diverse background skills and substantive pertinent experience,
and diversity among the directors as a whole.
Our Board approves the nominees to be submitted to the
stockholders for election as directors. Our Nominating and
Governance Committee and our Board considers whether
non-employee director nominees are independent as defined in the
corporate governance listing standards of the New York Stock
Exchange (NYSE) and whether they have a prohibited conflict of
interest with our business. Priority will be given to
individuals
11
with outstanding business experience and who currently serve or
have served as the chief executive officer of a company.
Our Nominating and Governance Committee considers director
candidates recommended by the directors. After reviewing a
potential directors qualifications, a suitable candidate
will be invited to meet with our Chief Executive Officer and
full Board to determine if the candidate is a good fit with the
rest of our Board.
Our Nominating and Governance Committee considers director
candidates recommended by stockholders who are entitled to vote
for the election of directors at the annual meeting of
stockholders and who comply with the notice procedures described
below. Recommendations by stockholders that are made in this
manner will be evaluated in the same manner as recommendations
for other candidates. Pursuant to our Bylaws, notice of a
stockholders intent to nominate a candidate for the Board
of Directors must contain certain specified information
regarding the nominating stockholder and the nominee.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related
Party Transaction Policy
We maintain a written policy and procedures for the review,
approval, or ratification of any related party transactions that
we are required to report under this section of the proxy
statement.
Under the related party transaction policy, any transaction,
arrangement or relationship between us and a related party must
be reviewed by the Nominating and Governance Committee, unless
pre-approved under the policy. The policy deems the following
transactions, arrangements or relationships to be pre-approved
under the policy:
|
|
|
|
|
compensation arrangements required to be reported under the
Director or Executive Compensation sections of the proxy
statement,
|
|
|
|
business expense reimbursements,
|
|
|
|
transactions with an entity in which the related party owns less
than 10% of the other entity,
|
|
|
|
transactions with an entity in which the related party is a
director only,
|
|
|
|
transactions with an entity in which the related party is not an
executive officer or a partner, and
|
|
|
|
indebtedness for transactions in the ordinary course of business.
|
Under the policy, the Nominating and Governance Committee, in
the course of the review of a potentially material related party
transaction, will consider, among other things, whether the
transaction is in our best interest, whether the transaction is
entered into on an arms-length basis, whether the transaction
conforms to our code of business conduct and ethics and whether
the transaction impacts a directors independence under the
NYSE listing standards.
During the year ended December 31, 2009, there were no
transactions that were required to be reported in this section
of the proxy statement where the related party policy and
procedures did not require review, approval or ratification or
where the policy and procedures were not followed.
BOARD
MATTERS
Board
Leadership Structure
Mr. Jastrow, who is not an officer or employee of the
company, has served as our non-executive chairman since we
became a separate publicly-traded company in December 2007. He
has significant experience serving as a public company chairman
and chief executive officer. He also serves or has served on
several other public company boards.
We believe it is the chief executive officers
responsibility to manage the company and the chairmans
responsibility to lead the board. We also believe that at this
time it is beneficial for us to have a separate
12
chairman whose sole job is leading the board. As a relatively
young publicly-traded company, this structure enables
Mr. DeCosmo, our chief executive officer, to focus his
entire energy on managing the company while affording us the
benefits of Mr. Jastrows significant board leadership
experience. We believe our chief executive officer and our
non-executive chairman have an excellent working relationship
that has allowed Mr. DeCosmo to make a good transition into
the role of chief executive officer.
Our corporate governance guidelines state that our board
believes that the separation of the offices of chairman and
chief executive officer is in the best interests of the company
and its stockholders at this time. However, should circumstances
change in the future, the board is free to choose its chairman
in any way it determines is in the best interests of the company
and its stockholders in accordance with our bylaws, including
determining whether our chief executive officer should also
serve as chairman.
The Board performs a number of its functions through committees.
All committee members and the chairmen of our Audit Committee,
Management Development and Executive Compensation Committee
(which we refer to as the Compensation Committee), and
Nominating and Governance Committee are independent directors
under the NYSE listing standards. Each committees charter
expressly provides that the committee has the sole discretion to
retain, compensate, and terminate its advisors. Current copies
of the charters of our Audit Committee, Compensation Committee,
and Nominating and Governance Committee are available on our
website at www.forestargroup.com under the Investor
Relations Corporate Governance section of our
website. Any changes to the committee charters will be reflected
on our website.
Risk
Oversight
The Board oversees our risk management processes and management
is responsible for managing our risks. The Board performs its
risk oversight role by using several different levels of review.
The chief executive officer reports on significant risks to the
Board at least annually, and at additional times as he
determines may be necessary or appropriate. In addition,
management reports on and the Board reviews the risks associated
with our strategic plan annually and periodically throughout the
year as part of the Boards consideration of our strategic
direction.
We have seven board members who are classified as independent
under NYSE listing standards, and two board members
(Mr. Jastrow and Mr. Brill) who are not yet classified
as independent solely because of their prior relationships with
Temple-Inland. We anticipate that both Mr. Jastrow and
Mr. Brill will be classified as independent in December
2010. A number of our board members are currently serving or
have served as members of senior management of other public
companies and have served as directors of other public
companies. We believe that the number of independent,
experienced directors that make up our board, along with
oversight of the board by the non-executive chairman, benefits
our company and our stockholders.
Each of the Boards Committees also oversees the management
of risks that fall within the Committees areas of
responsibility. In performing this function, each Committee has
full access to management, as well as the ability to engage
advisors.
The Audit Committee receives reports at least annually from
management regarding the companys process for assessment
of risks. In addition, our Director of Internal Audit, who
functionally reports directly to the Audit Committee, assists in
identifying, evaluating and implementing risk management
controls and methodologies to address identified risks. The
Audit Committee reports regularly to the full Board.
The Compensation Committee considers the impact of our executive
compensation programs, and the incentives created by the
compensation awards that it administers, on our risk profile.
The Compensation Committee reviews and considers, among other
things, the incentives that our programs create and the factors
that may reduce the likelihood of excessive risk taking. The
Compensation Committee reports regularly to the full Board.
We believe this division of responsibilities is the most
effective approach for addressing the risks facing our company
and that our board composition and leadership structure support
this approach.
13
Audit
Committee
The Audit Committee assists the Board in its oversight of:
|
|
|
|
|
the integrity of our financial statements;
|
|
|
|
compliance with legal and regulatory requirements;
|
|
|
|
the independent registered public accounting firms
qualifications and independence; and
|
|
|
|
the performance of the internal audit function and independent
registered public accounting firm.
|
In addition, the Audit Committee prepares the report that SEC
rules require be included in the annual proxy statement. The
Audit Committee has the sole authority to retain, compensate,
and terminate the independent registered public accounting firm.
Our Board of Directors has determined that there is at least one
audit committee financial expert serving on the Audit Committee,
James A. Rubright, who is an independent director. In addition,
our Board of Directors has determined, in its business judgment,
that all members of the Audit Committee are financially literate
and independent as defined in the NYSE corporate governance
standards. During 2009, the members of the Audit Committee were
Mr. Rubright (Chairman), Ms. Brown, Mr. McAuley
and Mr. Powers. The Audit Committee met 10 times in 2009.
As a result of Mr. McAuleys resignation, currently
the members of the Audit Committee are Mr. Rubright
(Chairman), Ms. Brown and Mr. Powers.
Management
Development and Executive Compensation Committee
The Compensation Committee is responsible for:
|
|
|
|
|
determining and approving, either as a committee or together
with other independent directors (as directed by the Board), the
CEOs compensation;
|
|
|
|
determining and approving the compensation of the other
executive officers;
|
|
|
|
establishing the compensation philosophies, goals, and
objectives for executive officers;
|
|
|
|
advising the Board on the performance, salaries, and incentive
compensation of the executive officers;
|
|
|
|
establishing compensation plans for non-executive employees and
approving annual bonus pools;
|
|
|
|
advising the Board with respect to employee benefit programs;
|
|
|
|
advising the Board with respect to equity and long-term
incentive plans;
|
|
|
|
conducting an annual review of executive officers expense
reports;
|
|
|
|
conducting an annual review of executive officers personal
usage of company-owned facilities and equipment; and
|
|
|
|
preparing a Compensation Committee report on executive
compensation for inclusion in our annual proxy statement filed
with the Securities and Exchange Commission.
|
The Compensation Committee may engage a compensation consultant
to provide market data regarding executive compensation and
advice about proposed compensation programs and amounts. For
2009, the Compensation Committee engaged Hewitt Associates LLC
as compensation consultant.
The non-executive Chairman, the Chief Executive Officer or the
Chief Administrative Officer recommend executive compensation
amounts and programs to the Compensation Committee. The
Compensation Committee has engaged a compensation consultant to
provide advice about proposed compensation programs and amounts
and to provide market survey data regarding executive
compensation. The compensation consultant provides specific data
to the Compensation Committee on an annual basis and at other
times upon request. The Compensation Committee invites a
representative of the compensation consultant to attend meetings
of the committee from time to time, and also may meet with the
representative in executive session periodically.
14
Once the full Board approves any compensation recommendations of
the Compensation Committee, administration of the compensation
programs is delegated to the Chief Administrative Officer.
The members of the Compensation Committee are Mr. Johnson
(Chairman), Ms. Brown, Mr. Currie, and
Mr. Rubright, all of whom our Board of Directors has
determined, in its business judgment, are independent as defined
in the NYSE corporate governance standards. The Compensation
Committee met five times in 2009.
Compensation
Committee Interlocks and Insider Participation
There are no Compensation Committee interlocks among the members
of the Board and no member of the Compensation Committee has a
transaction reported under Certain Relationships and Related
Party Transactions.
Nominating
and Governance Committee
The Nominating and Governance Committee is responsible for:
|
|
|
|
|
periodically reviewing the structure of the Board, at least
annually, to assure that the proper skills and experience are
represented on the Board;
|
|
|
|
recommending nominees to serve on the Board of Directors;
|
|
|
|
reviewing potential conflicts of prospective Board members;
|
|
|
|
recommending the size of the Board;
|
|
|
|
recommending the membership of the committees;
|
|
|
|
reviewing corporate governance issues;
|
|
|
|
reviewing performance and qualifications of Board members before
they stand for reelection;
|
|
|
|
reviewing stockholder proposals and recommending to the Board
action to be taken regarding stockholder proposals;
|
|
|
|
reviewing outside directorships in other publicly held companies
by our senior officers;
|
|
|
|
acting in an advisory capacity to the Board of Directors
regarding activities that relate to issues of social and public
concern, matters of public policy and the environment, and
significant legislative, regulatory and social trends and
developments; and
|
|
|
|
recommending director compensation to the full Board.
|
The Nominating and Governance Committee may engage a
compensation consultant to provide market data regarding
director compensation and advice about proposed director
compensation programs and amounts.
In January 2008, Hewitt reviewed our director compensation
program and provided market survey data and advice regarding
director compensation to the Nominating and Governance
Committee. The Chief Executive Officer or the Chief
Administrative Officer recommend director compensation amounts
and programs to the Nominating and Governance Committee. Once
the full Board approves any director compensation
recommendations of the Nominating and Governance Committee,
administration of the compensation programs is delegated to the
Chief Administrative Officer. There have been no changes to the
director compensation program since the January 2008 Hewitt
review.
During 2009, the members of the Nominating and Governance
Committee were Mr. Smith (Chairman), Mr. McAuley,
Mr. Powers, and Mr. Dougherty, all of whom our Board
of Directors has determined, in its business judgment, are
independent as such term is defined in the NYSE corporate
governance standards. The Nominating and Governance Committee
met four times in 2009. As a result of Mr. McAuleys
resignation, currently the members of the Nominating and
Governance Committee are Mr. Smith (Chairman),
Mr. Powers and Mr. Dougherty.
15
Executive
Committee
The Executive Committee may exercise all the authority of the
Board of Directors in the management of our business and affairs
except:
|
|
|
|
|
matters related to the composition of the Board,
|
|
|
|
changes in the Bylaws, and
|
|
|
|
certain other significant corporate matters.
|
The members of the Executive Committee are the Chairman of the
Board, who serves as Chairman of the Executive Committee, and
the Chairman of each standing committee of the Board:
Mr. Jastrow, Mr. Rubright, Mr. Johnson, and
Mr. Smith. The Executive Committee met two times in 2009.
Director
Independence
Our Board has adopted corporate governance guidelines that set
forth our director independence standards, which standards are
discussed below. Our corporate governance guidelines are posted
on our website at www.forestargroup.com under the
Investor Relations Corporate Governance
section of our website. In accordance with our corporate
governance guidelines and the NYSE rules, at least a majority of
our directors are independent.
All directors other than Messrs. Jastrow, DeCosmo and Brill
satisfy our director independence standards. Mr. DeCosmo
does not meet these independence standards because he is one of
our officers. Messrs. Jastrow and Brill do not meet these
standards because of their prior relationship with
Temple-Inland, which, under the NYSE independence standards,
will preclude independence until three years after termination
of such relationships, or December 2010.
The Board defines independence as meeting the requirements to be
considered independent directors as defined under current NYSE
rules. The Board has established the following additional
guidelines to assist it in determining director independence:
|
|
|
|
|
If not otherwise prohibited by the NYSE rules, any commercial or
charitable relationship that is not required to be reported in
the proxy statement to stockholders will not be considered a
material relationship that would impair a directors
independence.
|
|
|
|
To serve as a member of any committee of the Board, the director
must meet any additional requirements of independence set forth
in the committees charter or applicable law.
|
There were no material transactions or relationships between us
and any of our independent directors during 2009. In making its
determination that our non-employee directors other than
Messrs. Jastrow and Brill are independent, our Board
considered:
|
|
|
|
|
We sold timber to Temple-Inland pursuant to a timber sale and
purchase agreement. The agreement expires December 31,
2012, and sales are at market prices. Mr. Smith is a
director of Temple-Inland.
|
|
|
|
We engaged Goldman Sachs in respect of two investment banking
engagements one related to an unsolicited
stockholder proposal and the second related to our sale of
certain HBU timberland assets. Mr. Johnson is a director of
Goldman Sachs Group, Inc. and Ms. Brown is an employee of
Goldman, Sachs & Co.
|
Our Board felt that none of these transactions affected any
directors independence because none of the independent
directors has a direct or indirect material interest in these
transactions and, with respect to the Goldman engagements, the
transactions do not exceed the greater of $1 million or 2%
of Goldmans consolidated gross revenues. Our directors
typically recuse themselves from voting on any matters in which
there may be a conflict of interest.
There is no family relationship between any of the nominees,
continuing directors and executive officers of Forestar.
16
Board
Meetings
Our Board typically meets at least four times a
year. Our Board met five times in 2009. Each director
attended at least 75% of Board and committee meetings held by
all committees on which they served.
Our Board holds regularly scheduled executive sessions with only
non-management directors present. Executive sessions were held
at four of the five Board meetings in 2009. Our non-executive
Chairman of the Board serves as presiding director to lead these
executive sessions of the Board. In addition, our Board meets at
least once a year in executive session with only independent
directors. The Chairmen of the Audit, Compensation and
Nominating and Governance Committees serve as presiding director
to lead these non-management executive sessions on a rotating
basis.
Other
Corporate Governance Matters
Under our corporate governance guidelines, a director is deemed
to have tendered his or her resignation in the event of a change
in job status from the status held at the time of election to
our Board. The Nominating and Governance Committee will review
whether the new occupation or retirement of the director is
consistent with the needs and composition of our Board and
recommend action to our Board based on such review. Also under
our corporate governance guidelines, non-employee directors may
not serve on the boards of directors of more than five public
companies.
We expect all Board members to attend our annual meeting of
stockholders, but from time to time other commitments may
prevent all Board members from attending. All Board members
attended our 2009 annual meeting of stockholders.
Non-employee directors must retire by the annual meeting
following their 72nd birthday, and employee directors must
resign from the Board at the time they retire or otherwise
terminate employment with us, but no later than their
65th birthday.
The charters for the Audit Committee, Compensation Committee and
Nominating and Governance Committee are available on our website
at www.forestargroup.com under the Investor
Relations Corporate Governance section of our
website. We will provide a copy of these documents, without
charge, to any stockholder upon request to our Corporate
Secretary at our principal executive offices.
Policies
on Business Conduct and Ethics
All our directors, officers and employees are required to abide
by our Standards of Business Conduct and Ethics. This code
covers all areas of professional conduct, including conflicts of
interest, unfair or unethical use of corporate opportunities,
protection of confidential information, compliance with all
applicable laws and regulations, and oversight and compliance.
Our Chief Executive Officer, Chief Financial Officer and Chief
Accounting Officer are also required to abide by our Code of
Ethics for Senior Financial Officers. The Standards of Business
Conduct and Ethics and Code of Ethics for Senior Financial
Officers are available on our website at
www.forestargroup.com under the Investor
Relations Corporate Governance section of our
website. We will provide a copy of these documents without
charge to any stockholder upon request to our Corporate
Secretary at our principal executive offices. Any future
amendments to either of these codes, and any waiver of the Code
of Ethics for Senior Financial Officers and of certain
provisions of the Standards of Business Conduct and Ethics for
directors or executive officers, will be disclosed on our
website promptly following the amendment or waiver.
Communications
with Directors
Stockholders and other interested parties may communicate with
non-management directors by forwarding written comments to an
independent third party that has agreed to forward the comments
to the presiding director with a copy to our General Counsel.
The independent third party is The Network and such comments may
be sent to:
The Network
333 Research Court
Norcross, GA 30092
Attention: Call Center Forestar Group
17
Alternatively, interested parties may communicate online with
our non-management directors by forwarding comments to The
Network at www.reportlineweb.com/Forestar.
The presiding director is our non-executive Chairman of the
Board. Any changes in the presiding director or the independent
third party for purposes of communicating with the presiding
director after publication of this proxy statement will be
posted on our website at www.forestargroup.com.
DIRECTOR
COMPENSATION
Our director compensation program is designed in recognition of
the time commitment and preparations required for directors to
fulfill their responsibilities, to better align director
compensation with the long-term interests of our stockholders,
and to assist in recruiting high caliber directors. Alignment
with stockholders is emphasized through stock ownership
requirements, an annual restricted stock unit grant, and the
ability to receive restricted stock units in lieu of fees. Our
director fee schedule, which has not been revised subsequent to
the first meeting of our Board as a separate publicly-traded
company, is as follows:
Director
Fee Schedule
|
|
|
Annual Retainer Fee
|
|
$50,000 (paid $12,500 per quarter)
|
Annual Non-executive Chair Retainer
|
|
$250,000 (paid $62,500 per quarter)
|
Annual Audit Committee Chair Retainer
|
|
$15,000
|
Annual Other Committee Chair Retainer
|
|
$5,000
|
Meeting Fees
|
|
$1,500 for each meeting in excess of 5 per year for Board of
Directors and Executive Committee meetings combined; $1,500 for
each committee meeting in excess of 5 per year for such committee
|
Annual Restricted Stock Unit Grant payment deferred
until retirement
|
|
$75,000
|
Match for deferring fees in lieu of current cash
payment deferred until retirement
|
|
50%
|
In addition to the above fees, when a new director is appointed
or elected, the director receives a stock option grant to
acquire 20,000 shares of our common stock, which stock
options will have an exercise price per share equal to the fair
market value on the date of grant, which is the date the
director is first elected, and which will vest 6,500 shares
on the first anniversary of the date of grant, 6,500 shares
on the second anniversary of the date of grant, and
7,000 shares on the third anniversary of the date of grant.
The option term is ten years. These stock option grants are made
to further align director compensation with the interests of
stockholders. We do not have any program, plan or practice to
time option grants to our directors in coordination with the
release of material non-public information. We do not time our
release of material non-public information for the purpose of
affecting the value of director compensation.
Mr. Jastrows non-executive chair retainer is not
eligible for a match under the fee deferral plan described
below. Mr. DeCosmo does not receive a fee for his service
on our Board other than his compensation as an employee.
Directors are reimbursed for expenses incurred in attending
Board and committee meetings, including those for travel, food
and lodging.
Fee
Deferral Plan
Instead of immediate payment of director fees in cash, directors
may defer the fees into restricted stock units, or RSUs, payable
at retirement in shares of our common stock or cash, as
determined by our Board of Directors. The aggregate amount
deferred into RSUs would equal 1.5 times the amount of cash fees
deferred, except for the non-executive chair retainer which
aggregate amount deferred into RSUs would equal one times the
amount of cash fees deferred. The number of RSUs is determined
by dividing the aggregate deferred amount by the closing price
of our common stock on the date deferred and rounding down to
the nearest whole unit. RSUs are vested
18
when granted. Dividend equivalents would be credited as
additional RSUs if and when paid to stockholders. At retirement,
a director will be paid the number of shares of common stock or
cash, as determined by our Board of Directors at the time of
grant, equal to the number of RSUs credited to his or her
account.
If a director chooses cash payment on a current basis instead of
deferring his or her fees, the director will not receive a match
with respect to such fees. Directors may retire at any time, but
must retire by the annual meeting following their
72nd birthday. The directors fee deferral plan
provides for accelerating payment in the event the
directors service terminates due to a change in control.
Annual
Restricted Stock Unit Grant
On the date of the first regularly scheduled Board meeting each
year, each non-employee director receives a number of RSUs
determined by dividing $75,000 by the closing price of our
common stock on such date. The RSUs are vested when granted. The
RSUs are payable at retirement in shares of our common stock or
cash, as determined by our Board of Directors.
Stock
Ownership Guidelines
Directors are required to hold Forestar stock or RSUs with an
aggregate value of at least $150,000 by the end of three years
from initial election. This stock ownership policy is contained
in our Corporate Governance Guidelines, which are available on
our website at www.forestargroup.com under the
Investor Relations Corporate Governance
section of our website. All our directors have satisfied their
stock ownership requirements.
Insurance
and Indemnification
All directors are covered under our director and officer
liability insurance policies for claims alleged in connection
with their service as a director. We have entered into
indemnification agreements with each of our directors agreeing
to indemnify them to the fullest extent permitted by law for
claims alleged in connection with their service as a director.
2009
Director Compensation
The following table presents 2009 director compensation in
accordance with SEC rules. However, directors do not receive
any payout of compensation deferred into RSUs until they retire.
The value received at the time the director retires may be
different than the amount reported below. All of our
directors except Mr. Jastrow elected to defer their 2009
fees until retirement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
or
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
Paid in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)(2)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
Louis R. Brill
|
|
|
|
|
|
$
|
156,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
156,727
|
|
Kathleen Brown
|
|
|
|
|
|
$
|
167,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
167,963
|
|
William G. Currie
|
|
|
|
|
|
$
|
154,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
154,467
|
|
Michael E. Dougherty
|
|
|
|
|
|
$
|
154,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
154,470
|
|
Kenneth M. Jastrow, II
|
|
$
|
300,000
|
|
|
$
|
74,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
374,998
|
|
James A. Johnson
|
|
|
|
|
|
$
|
166,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11,690
|
(3)
|
|
$
|
178,160
|
|
Thomas H. McAuley(4)
|
|
|
|
|
|
$
|
165,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
165,713
|
|
William Powers, Jr.
|
|
|
|
|
|
$
|
163,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
163,475
|
|
James A. Rubright
|
|
|
|
|
|
$
|
190,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
190,463
|
|
Richard M. Smith
|
|
|
|
|
|
$
|
161,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
161,967
|
|
19
|
|
|
(1) |
|
Represents the aggregate grant date fair value of awards granted
in 2009 as calculated in accordance with ASC 718. The valuation
model and assumptions used can be found in Note 19 to our
audited consolidated financial statements in our 2009 Annual
Report on
Form 10-K. |
|
(2) |
|
The amounts shown in column (c) relate to (a) the
annual restricted stock unit grant and (b) cash fees earned
in 2009 but deferred until retirement. The deferred fees earn a
match of 50% and are converted into restricted stock units.
Under the terms of our director fee deferral program, fees are
rounded down to the nearest whole restricted stock unit. The
chart below shows the annual grant, fees earned, match, and
resulting restricted stock units credited to each
directors account in 2009, along with the directors
age 72 retirement date: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees/Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b+c+d+e+f)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
Value on
|
|
|
Converted
|
|
|
|
|
|
|
|
|
|
|
|
|
Board and
|
|
|
|
|
|
Restricted
|
|
|
Grant Date of
|
|
|
into Restricted
|
|
|
Normal or
|
|
|
|
|
|
|
Committee
|
|
|
Committee
|
|
|
|
|
|
Stock
|
|
|
Fees Deferred
|
|
|
Stock Units
|
|
|
Expected
|
|
|
|
Board
|
|
|
Retainer
|
|
|
Meeting
|
|
|
|
|
|
Unit
|
|
|
Until
|
|
|
Payable Upon
|
|
|
Retirement
|
|
Name
|
|
Retainer
|
|
|
Fees
|
|
|
Fees
|
|
|
Match
|
|
|
Grant
|
|
|
Retirement
|
|
|
Retirement
|
|
|
Date
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
Louis R. Brill
|
|
$
|
50,000
|
|
|
|
|
|
|
$
|
4,500
|
|
|
$
|
27,250
|
|
|
$
|
75,000
|
|
|
$
|
156,750
|
|
|
|
14,439
|
|
|
|
2014
|
|
Kathleen Brown
|
|
$
|
50,000
|
|
|
|
|
|
|
$
|
12,000
|
|
|
$
|
31,000
|
|
|
$
|
75,000
|
|
|
$
|
168,000
|
|
|
|
15,126
|
|
|
|
2018
|
|
William G. Currie
|
|
$
|
50,000
|
|
|
|
|
|
|
$
|
3,000
|
|
|
$
|
26,500
|
|
|
$
|
75,000
|
|
|
$
|
154,500
|
|
|
|
14,223
|
|
|
|
2020
|
|
Michael E. Dougherty
|
|
$
|
50,000
|
|
|
|
|
|
|
$
|
3,000
|
|
|
$
|
26,500
|
|
|
$
|
75,000
|
|
|
$
|
154,500
|
|
|
|
14,251
|
|
|
|
2014
|
|
Kenneth M. Jastrow, II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
|
8,073
|
|
|
|
2019
|
|
James A. Johnson
|
|
$
|
50,000
|
|
|
$
|
5,000
|
|
|
$
|
6,000
|
|
|
$
|
30,500
|
|
|
$
|
75,000
|
|
|
$
|
166,500
|
|
|
|
15,350
|
|
|
|
2016
|
|
Thomas H. McAuley
|
|
$
|
50,000
|
|
|
|
|
|
|
$
|
10,500
|
|
|
$
|
30,250
|
|
|
$
|
75,000
|
|
|
$
|
165,750
|
|
|
|
14,994
|
|
|
|
2017
|
|
William Powers, Jr.
|
|
$
|
50,000
|
|
|
|
|
|
|
$
|
9,000
|
|
|
$
|
29,500
|
|
|
$
|
75,000
|
|
|
$
|
163,500
|
|
|
|
14,835
|
|
|
|
2019
|
|
James A. Rubright
|
|
$
|
50,000
|
|
|
$
|
15,000
|
|
|
$
|
12,000
|
|
|
$
|
38,500
|
|
|
$
|
75,000
|
|
|
$
|
190,500
|
|
|
|
17,548
|
|
|
|
2019
|
|
Richard M. Smith
|
|
$
|
50,000
|
|
|
$
|
5,000
|
|
|
$
|
3,000
|
|
|
$
|
29,000
|
|
|
$
|
75,000
|
|
|
$
|
162,000
|
|
|
|
15,058
|
|
|
|
2017
|
|
|
|
|
(3) |
|
Mr. Johnson served on the Temple-Inland board of directors
until November 2007. Under the Temple-Inland director fee
deferral plan, Mr. Johnson deferred director fees into
Temple-Inland phantom shares. Mr. Johnson elected to
receive settlement of the phantom shares in 15 annual
installments commencing November 2007. Mr. Johnson received
Forestar phantom shares in connection with equitable adjustments
to his remaining Temple-Inland phantom shares in the spin-off.
This amount represents payment of his November 2009
Temple-Inland board retirement installment, which was paid
666 shares in our common stock and 670 shares in cash.
The total value of this installment payment was $11,690 (based
on the $8.75 closing price per share of our common stock as
reported by the NYSE on the settlement date). |
|
(4) |
|
Mr. McAuley notified the Board of a change in job status
and, in accordance with our Corporate Governance Guidelines,
tendered his resignation. On March 20, 2010, our Board
accepted his resignation. |
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
What is
the context for our 2009 performance and compensation
actions?
General economic conditions remained weak during 2009 and we
continued to see challenging business conditions. Amid
significant uncertainty regarding the timing and extent of any
meaningful rebound in the housing markets and the overall
economy, our primary strategic goals for the year were
generating cash and reducing debt to strengthen our balance
sheet, enhancing our mineral resources disclosures, and
positioning our business to capitalize on market recoveries when
they occur in our business segments. We believe we made
significant progress towards accomplishing each of these goals.
20
In 2009, we sold about 95,000 acres of timber and
timberland in Georgia and Alabama for $160 million
generating cash proceeds of $154 million, which were
principally used to reduce debt and pay taxes. These timberland
land sales were completed despite difficult markets with limited
credit availability to timberland buyers.
Other 2009 highlights include:
|
|
|
|
|
Receiving $24.9 million in reimbursements from special
public improvement districts, including the first reimbursement
of $20.4 million from the district associated with our
Cibolo Canyons project;
|
|
|
|
Implementing mineral resources systems to track and disclose
estimated proved reserved, and leasing over 25,800 net
mineral acres to oil and gas companies for exploration and
production activities; and
|
|
|
|
Reducing debt by over 35 percent, or $121 million,
since year-end 2008.
|
Our executive compensation programs are structured to motivate
our senior management team to execute our primary strategic
goals. In keeping with our compensation philosophy, outlined
below, that a significant portion of compensation should be
performance-based, the results of our timberland sales and
mineral leasing efforts are reflected in the bonuses earned
under our annual incentive program. However, in a departure from
prior years, bonuses were paid one-third in cash and two-thirds
in restricted stock vesting ratably over three years, further
aligning management with stockholder interests and enhancing
executive retention. More specific information regarding our
2009 compensation is presented below.
What is
our compensation philosophy?
Our compensation philosophy is that a significant part of our
executives compensation should relate to our performance,
as measured primarily by return on assets (ROA, which is
calculated as earnings before interest and taxes [EBIT] divided
by the book value of our assets as of the beginning of the
fiscal year), value creation (VC), and segment operating income
(SI), because we believe there is a strong correlation between
these performance components and long-term stockholder value
creation.
What are
our compensation objectives?
Our executive compensation program is designed to attract,
retain, and motivate key executives to maximize return on
assets, value creation, segment operating income, and
performance. We define VC for our real estate segment as the
value created by moving property through the development process
while meeting or exceeding our return expectations. We define VC
for our mineral resources segment as promoting the leasing and
exploration of our mineral acreage to increase the number of
producing wells, our proved reserves and the production of oil
or gas. We are guided by the following principles in determining
the form and amount of executive compensation:
|
|
|
|
|
Compensation should be tied to performance. A
meaningful portion of total compensation is tied to and varies
with our financial and operating performance, as well as
individual performance. Bonuses are considered on an annual
basis based on return on assets, VC and SI, and achievement of
individual performance objectives. In addition, restricted stock
and restricted stock unit awards generally contain a vesting
component tied to the achievement of a cumulative average
three-year ROA.
|
|
|
|
Compensation should align executives and
stockholders interests. Our annual
incentive bonuses are tied closely to ROA, VC and SI because we
believe there is a strong correlation between these performance
components and long-term stockholder value creation. In
addition, the use of equity-based compensation aligns our
executives interests with our stockholders interests
and encourages our executives to focus on long-term growth and
performance.
|
Equity-based awards also help retain executives because they
contain forfeiture provisions if the executive terminates
employment other than for retirement, death or disability. In
addition, a 401(k) plan match and health and welfare benefits
help retain executives. Change in control agreements help ensure
that our executives continue to work in the best interests of
our stockholders and help alleviate concerns during any
potential change in control situations that might otherwise lead
the executives to work elsewhere or to work other than in the
best interests of the company or its stockholders.
21
What are
the elements of our compensation program?
The elements of our compensation program are as follows:
|
|
|
|
|
Salaries;
|
|
|
|
Annual incentive bonuses based on performance measurements;
|
|
|
|
Equity-based incentive (long-term) awards including stock
options, stock appreciation rights, restricted stock, and
restricted stock units;
|
|
|
|
401(k) plan, tax qualified employer retirement contributions,
and a supplemental executive retirement plan, or SERP;
|
|
|
|
Health and welfare benefits; and
|
|
|
|
Change in control agreements.
|
How is
each element of compensation determined?
Generally speaking, each element of compensation is evaluated
independently to determine whether in our Compensation
Committees judgment it is competitive within our segments
of the real estate or oil and gas industries, considering both
public and private competitors. Our Compensation Committee
maintains a balance among the elements of compensation that ties
a significant portion of compensation to performance. Our
Compensation Committee also uses tally sheets that show all
elements of compensation as a total. Although our Compensation
Committee does not establish specific preset allocation formulas
to determine the proportion of each element in relation to the
other elements, it generally tries to maintain a balance among
the different elements:
|
|
|
|
|
|
|
|
|
Measurement
|
Element
|
|
Performance Measure
|
|
Period
|
|
Salary
|
|
Continued service subject to annual evaluation
|
|
1 year
|
Annual incentive bonus
|
|
ROA, VC and SI
|
|
1 year
|
Long-term incentives:
|
|
|
|
|
Restricted stock or restricted stock units
|
|
Time vested with minimum ROA threshold
|
|
3 years
|
Stock options or stock appreciation rights
|
|
Stock price
|
|
10 years
|
Retirement benefits
|
|
Retirement contribution is dependent on salary and bonus
|
|
None
|
Health and welfare benefits
|
|
None
|
|
None
|
Change in control agreements
|
|
None
|
|
None
|
The below table shows the mix of the compensation elements to
the total compensation for the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Component
|
|
By Payment Type
|
|
|
|
|
Annual
|
|
Long-Term
|
|
|
|
|
|
|
|
|
|
|
Base
|
|
Incentive
|
|
Incentive
|
|
Other
|
|
Cash
|
|
Equity
|
|
Other
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEO
|
|
|
17
|
%
|
|
|
30
|
%
|
|
|
52
|
%
|
|
|
1
|
%
|
|
|
27
|
%
|
|
|
72
|
%
|
|
|
1
|
%
|
All Named Executive Officers
|
|
|
19
|
%
|
|
|
35
|
%
|
|
|
45
|
%
|
|
|
1
|
%
|
|
|
31
|
%
|
|
|
68
|
%
|
|
|
1
|
%
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEO
|
|
|
22
|
%
|
|
|
8
|
%
|
|
|
68
|
%
|
|
|
2
|
%
|
|
|
30
|
%
|
|
|
68
|
%
|
|
|
2
|
%
|
All Named Executive Officers
|
|
|
24
|
%
|
|
|
12
|
%
|
|
|
62
|
%
|
|
|
2
|
%
|
|
|
36
|
%
|
|
|
62
|
%
|
|
|
2
|
%
|
Data from 2007, the period prior to our spin-off, is not
presented because our NEOs were in different positions so the
data is not comparable.
22
Year to year, the exact allocation may vary, but the overall mix
is strongly weighted to pay for performance in accordance with
our philosophy. In 2009, the mix reflects that the annual
incentive bonuses were paid one-third in cash and two-thirds in
equity for all named executive officers, as discussed below. Our
Compensation Committee believes that our program effectively
achieves the objective of aligning compensation with performance
measures that are directly related to our financial goals and
creation of stockholder value without encouraging executives to
take unnecessary or excessive risks.
How are base salaries determined?
Base salaries are determined based on the executives
responsibilities, performance, experience, and the Compensation
Committees judgment regarding competitive requirements and
internal equity. No specific formula is applied to determine the
weight of each factor. In reviewing the salaries of executives,
the Compensation Committee from time to time reviews information
from independent surveys and publicly-available data regarding
the peer group companies discussed below. Our CEOs salary
and the salaries of our other named executive officers are on
average at or below the median of our peer group and survey
data. Our Compensation Committee adopted a policy of using
incentive bonus awards rather than base salary to reward
outstanding performance. Our Compensation Committee may consider
increases in the salaries of our executives based on increased
responsibilities, realignment with market levels, or other
factors in addition to the factors described above.
In light of the current economic climate, our Compensation
Committee determined not to adjust base salaries for the CEO or
our other named executive officers in 2009.
How are annual incentive bonuses determined?
Bonuses are based largely on our performance (including ROA and
other performance measures of the business as a whole or the
business segment in which the individual is an employee), VC,
SI, and the employees personal performance in meeting
specified objectives. Our Compensation Committee will also
consider the degree to which the employees actions have
laid the groundwork for future earnings. The types and relative
importance of specific financial and other business factors vary
among the executives depending on their positions and the
particular operations or functions for which they are
responsible. For example, executives may be given a bonus for
accomplishing specific objectives or projects, including
successful completion of acquisitions, entitlements,
developments or sales.
Our Compensation Committee has selected a combination of ROA, VC
and SI as the performance measures, weighted as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Potential
|
|
|
Weighted by:
|
Business Group
|
|
ROA
|
|
VC
|
|
SI
|
|
Business Administration
|
|
|
75
|
%
|
|
|
25
|
%
|
|
|
|
|
Real Estate
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
|
|
Mineral Resources
|
|
|
50
|
%
|
|
|
25
|
%
|
|
|
25
|
%
|
Fiber Resources
|
|
|
50
|
%
|
|
|
|
|
|
|
50
|
%
|
The incentive bonuses would equal a percentage of EBIT
determined by our ROA, if ROA falls between certain percentages
determined by our Compensation Committee. If the actual amount
of ROA for the year were to fall between such percentages, the
actual bonus potential would be based on the above components
and percentages. The ROA component percentage would be deemed
earned as a result of achievement of ROA. The VC component
percentage would be subject to our Compensation Committees
determination of the executives supportable and documented
value creation performance, including the evaluation of such
factors as the successful completion of strategic objectives,
acquisitions and new ventures, formation of special
reimbursement districts, economic development, land use
entitlements, strategic objectives, repositioning of assets,
increases in proved reserves, and sales. If the annual segment
budgeted income were achieved, 75% of the segment income
component would be earned.
23
For business administration executives, the ROA component would
equal approximately 100% of base salary when ROA approximates
our cost of capital. For real estate, mineral resources and
fiber resources executives, the ROA component would equal
approximately 125%-150% of base salary when ROA approximates our
cost of capital. If our ROA is increased by significant or
unusual transactions, our Compensation Committee may elect to
adjust the payment structure from all cash bonuses to cash and
equity, or to reduce or eliminate the impact of the significant
or unusual transactions on the ROA calculation.
The CEO annual bonus opportunity is set near the
50th percentile of our survey data, with upside potential
to reward for above-target performance, and downside potential
if a threshold performance level is not met. Individual targets
for other executive officers vary according to role, based on
the judgment of the Compensation Committee.
For purposes of determining the names executive officers
2009 incentive bonus, our Compensation Committee selected a
combination of ROA (calculated as earnings before interest and
taxes (EBIT) divided by the book value of our assets as of the
beginning of the fiscal year), and VC as the performance
measures. The 2009 incentive bonuses would equal a percentage of
EBIT determined by our 2009 ROA, if ROA is between 4% and 24%.
If the amount of our 2009 ROA is between 4% and 24%, the actual
bonus potential would be weighted based on the following two
components and their respective percentages presented in the
table below:
|
|
|
|
|
|
|
|
|
|
|
Bonus Potential Weighted by:
|
Executive Officer
|
|
ROA
|
|
VC
|
|
Messrs. DeCosmo, Nines, Grimm and Jehl
|
|
|
75
|
%
|
|
|
25
|
%
|
Mr. Knight
|
|
|
50
|
%
|
|
|
50
|
%
|
For all our named executive officers except Mr. Knight, the
ROA component of the 2009 incentive bonus would equal
approximately 100% of base salary when we achieve an ROA that
approximates our cost of capital. For Mr. Knight, the ROA
component would equal approximately 150% of base salary when we
achieve an ROA that approximates our cost of capital.
How did our 2009 performance impact determination of
bonuses?
In February 2009, we announced a plan developed by
Mr. DeCosmo and our named executive officers to enhance
shareholder value during
2009-10. The
plan included several near-term strategic initiatives, including
generating significant cash flow, principally from the sale of
HBU timberland, and reducing debt by approximately
$150 million. During 2009, we sold 95,000 acres of HBU
timberland for approximately $160 million, and received the
first $20.3 million reimbursement from a special public
improvement district at our Cibolo Canyons project near
San Antonio, TX. The cash flow generated by the initiatives
summarized above combined with our initiatives to lower
development and general and administrative costs allowed us to
reduce our debt by $121 million, or over 35%, during 2009.
Our 2009 ROA was approximately 13.8%, resulting in bonus
eligibility of our named executive officers for the ROA
component specified in the table below.
Another 2009 initiative was to increase transparency into our
mineral resources segment. We disclosed estimated proved
reserves related to our oil and gas mineral interests, provided
Texas and Louisiana net mineral acres by county, launched a web
site dedicated to our mineral resources segment, and continued
to increase the level of detail on the publicly disclosed maps
of our mineral ownership and activities. Also, despite
challenging credit markets, during 2009 we were successful in
amending our senior credit facility to provide covenant
flexibility and an option to extend the term through June 2012.
In determining the VC component for each of our named executive
officers, the Compensation Committee considered individual
performance and contributions toward VC. Mr. DeCosmo and
our other named executive officers were significantly and
primarily responsible for developing, overseeing and
implementing our
near-term
strategic initiatives. As a result of their successful execution
of these initiatives despite challenging
24
business conditions, the company is financially well-positioned
to capitalize on market recoveries when they occur in our
business segments.
The Compensation Committee used its own judgment, taking into
account individual performance, to determine the VC component
for each NEO rather than applying specific weighting or formulas
to the factors considered. In making its judgment, the
Compensation Committee considered the CEOs evaluation of
the other NEOs individual performance.
The following table reflects 2009 incentive bonuses paid to our
named executive officers and the form of payment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Payment
|
|
Name
|
|
ROA
|
|
|
VC
|
|
|
Bonus
|
|
|
Cash
|
|
|
Equity(1)
|
|
|
Mr. DeCosmo
|
|
$
|
645,000
|
|
|
$
|
215,000
|
|
|
$
|
860,000
|
|
|
$
|
287,000
|
|
|
$
|
573,000
|
|
Mr. Knight
|
|
$
|
455,000
|
|
|
$
|
145,000
|
|
|
$
|
600,000
|
|
|
$
|
200,000
|
|
|
$
|
400,000
|
|
Mr. Nines
|
|
$
|
323,000
|
|
|
$
|
167,000
|
|
|
$
|
490,000
|
|
|
$
|
163,000
|
|
|
$
|
327,000
|
|
Mr. Grimm
|
|
$
|
323,000
|
|
|
$
|
187,000
|
|
|
$
|
510,000
|
|
|
$
|
170,000
|
|
|
$
|
340,000
|
|
Mr. Jehl
|
|
$
|
323.000
|
|
|
$
|
127,000
|
|
|
$
|
450,000
|
|
|
$
|
150,000
|
|
|
$
|
300,000
|
|
|
|
|
(1) |
|
The equity portion of the 2009 bonus was paid in restricted
stock, one-third of which vests on each of the first three
annual anniversaries of the grant date of February 9, 2010.
Under SEC rules, only the cash portion of the 2009 bonus is
reflected in the Summary Compensation Table on page 32. The
equity portion of the 2009 bonus will be included in the Stock
Awards column of the Summary Compensation Table to be presented
in our 2011 proxy statement. |
For the 2009 annual incentive bonus, our Compensation Committee
elected to pay one-third of named executive officer bonuses in
cash, the balance being in restricted stock to vest ratably over
three years. The Compensation Committee believes that paying a
significant portion of executive officer bonuses in restricted
stock will further align the interests of executives and
shareholders. Also, employee retention is enhanced because our
executives will receive payment in future years only if they
remain employed by us.
Our Compensation Committee may, in its discretion, award cash
bonuses during the year as a result of extraordinary
performance. In addition, our Compensation Committee may elect
to pay sign-on bonuses and may elect to establish
other measures to determine annual bonus amounts for purposes of
recruiting a new executive.
How are equity-based incentive awards determined?
Our 2007 Stock Incentive Plan, or SIP, gives us the ability to
provide our eligible employees, including each of our named
executive officers, grants of compensation awards based on our
shares of stock. Our equity-based incentive awards include stock
options, stock appreciation rights, restricted stock, and
restricted stock units.
In making decisions regarding equity-based awards, our
Compensation Committee uses tally sheets to consider previous
grants, value and experience the executive brings to a role,
relative responsibilities of the executive, and the business
segment in determining sizes of awards. In the case of a new key
executive, or an executive assuming new responsibilities, an
initial grant may be made above usual annual targeted levels.
The amounts of equity-based awards are determined based on input
from the compensation consultant regarding market practices,
recommendations of the CEO (except for the CEOs awards,
whose recommendations are made by the non-executive Chairman),
and the judgment of our Compensation Committee. A dollar value
is established for the awards after reviewing competitive market
data for similar executives at companies within our peer group
and other comparable companies. The dollar value of the awards
may be below, at or above the mid-range of what other comparable
companies may offer in any given year. Our Compensation
Committee may also consider internal pay equity for equity
awards among executives, and progress toward meeting our stock
ownership guidelines. Our Compensation Committee also generally
allocates equity-based awards 50% to awards the value of which
are tied directly to the stock price (stock options and stock
25
appreciation rights) and 50% to full value awards (restricted
stock and restricted stock units). Our Compensation Committee
anticipates granting performance-based restricted stock awards
in the future.
In February 2009, the Compensation Committee approved grants of
awards to the CEO and other named executive officers as a group
at levels approximately 10% less than 2008 levels. In reducing
the awards as compared to the prior year, the Compensation
Committee considered both the unusual market conditions and the
importance of aligning our executives interests with
stockholders as a newly public company.
Our Compensation Committee anticipates making annual
equity-based award grants in February of each year to further
align interests of the executives with the interests of our
stockholders and to remain competitive with market practices,
support executive recruitment and retention, and establish
internal pay equity among executives.
What are the material terms of the equity-based incentive
awards?
The equity-based awards have the following terms:
|
|
|
Stock Options and Stock Appreciation Rights:
|
|
Stock options and stock appreciation rights have an exercise
price equal to the closing price per share on the NYSE on the
date of the grant; vest 25% each year over four years; provide
for accelerated vesting upon retirement, disability, death, or
if there is a change in control; and expire in ten years.
Options exercised are settled in common shares. Stock
appreciation rights are settled in cash.
|
Restricted Stock and Restricted Stock Units:
|
|
Restricted stock awards generally vest on the third anniversary
from the date of grant if we achieve a minimum 1% of annualized
ROA over such three-year period. Restricted stock awarded under
our bonus plan vests one-third per year. Restricted stock
awards have accelerated vesting upon disability, death, or if
there is a change in control. Restricted stock settles in common
shares and restricted stock units settle in cash.
|
Our SIP provides for equitable adjustment in the event of stock
splits or other equity restructurings. Awardees generally
receive the same adjustment stockholders receive.
Do the
executives have stock ownership guidelines?
Yes. To further align our executives financial interests
with those of our stockholders, we adopted the following minimum
stock ownership guidelines for our named executive officers:
VALUE OF
OWNERSHIP OF STOCK AS A MULTIPLE OF ANNUAL SALARY
|
|
|
|
|
|
|
Multiple of
|
|
Position
|
|
Salary
|
|
|
Chief Executive Officer
|
|
|
5x
|
|
Other Named Executive Officers
|
|
|
3x
|
|
Shares owned by the executive and their immediate family members
count toward the ownership guidelines. Shares held in the
Temple-Inland 401(k) plan, restricted stock, restricted stock
units, and performance stock units also count. Stock options are
not counted until they are exercised, and SARs are not counted.
The named executive officers have five years following the
spin-off or their initial election to meet the stock ownership
guidelines. Because we are a relatively new publicly-traded
company, none of our named executive officers except
Mr. Knight have satisfied their stock ownership
requirements as of December 31, 2009, although they are all
progressing toward meeting the requirements in a timely manner.
26
Are there
mandatory holding periods for stock acquired through exercise of
options?
Yes. Our executive officers are required to hold
100 percent of the net shares acquired through the exercise
of options until they meet our ownership guidelines. The
Compensation Committee maintains discretion to reduce or
eliminate future long-term incentive awards for an executive who
is not making adequate progress toward meeting the stock
ownership guidelines or does not retain the required level of
net shares acquired through the exercise of options.
Is there
an insider trading policy?
Yes. Under the terms of our insider trading policy, the named
executive officers may not trade in options, warrants, puts,
calls or similar hedging instruments, may not sell our
securities short, and may not hold our securities in
margin accounts.
How many
more shares can be issued under our long-term incentive
plans?
We have only one equity compensation plan, the Forestar 2007
Stock Incentive Plan, which was approved by our sole stockholder
prior to the spin-off. Information at year end 2009 about our
equity compensation plan under which our common stock may be
issued follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities to be
|
|
|
|
|
|
Remaining Available for
|
|
|
|
Issued Upon
|
|
|
|
|
|
Future Issuance
|
|
|
|
Exercise of
|
|
|
Weighted-Average
|
|
|
Under Equity
|
|
|
|
Outstanding
|
|
|
Exercise Price of
|
|
|
Compensation Plans
|
|
|
|
Options, Warrants
|
|
|
Outstanding
|
|
|
(Excluding
|
|
|
|
and Rights
|
|
|
Options, Warrants
|
|
|
Securities
|
|
Plan Category
|
|
(1)(2)
|
|
|
and Rights
|
|
|
Reflected in Column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
2,310,797
|
|
|
$
|
21.85
|
|
|
|
3,096,858
|
|
Equity compensation plans not approved by security holders
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
Total
|
|
|
2,310,797
|
|
|
$
|
21.85
|
|
|
|
3,096,858
|
|
|
|
|
(1) |
|
Includes approximately 1,363,000 issuable to employees and
directors of Temple-Inland and Guaranty resulting from the
equitable adjustment of Temple-Inland equity awards in
connection with our spin-off. |
|
(2) |
|
Includes 108,278 equity-settled restricted stock units, which
are excluded from the calculation of weighted-average exercise
price. |
Do we
provide qualified retirement benefits to executives?
Yes. We offer a tax-qualified defined contribution retirement
plan to our employees in which our named executive officers are
eligible to participate. Our defined contribution retirement
plan, which we also refer to as our 401(k) plan, has two
components: (a) employee contributions with company match,
and (b) company retirement contributions. Employees who
transferred to us from Temple-Inland in connection with the
spin-off received vesting credit under our 401(k) plan for the
years of service they were continuously employed by any
Temple-Inland company. Our 401(k) plan does not grant extra
years of credited service to executives. Extra years of credited
service would be granted only under our change in control
agreements, but not for any other reason.
Our 401(k) plan allows us to match an employees
contribution in accordance with the following formula: for each
dollar that an employee contributes to their 401(k) savings
account, we contribute a match of $1 up to 3% of the
employees compensation; thereafter, for each dollar that
an employee contributes of their next 3% of pay, we contribute a
match of $0.50. The maximum annual matching contribution is
limited to $4,500 for any employee considered highly compensated
under our plan. The match is vested 100% after two years of
employment.
27
In addition, we make a retirement contribution equal to 3.5% of
the employees compensation. The retirement contribution is
vested after two years of employment. Employees are offered a
wide range of investment choices under the plan for their
payroll contributions, and our match and retirement
contributions are invested proportionally in the same funds
selected by the employees for their own payroll contributions.
Do we
offer a Supplemental Executive Retirement Plan (SERP)?
Yes. The Internal Revenue Code limits the amount of compensation
that can be used in calculations under a tax-qualified defined
contribution retirement plan such as our 401(k) plan. Because we
wish to provide our executives with a continuing ability to save
for their retirement, we credit under the SERP an amount equal
to 3.5% of the executives pay in excess of this limit
(earnings of $245,000 in 2009) plus the return such amount
would have earned if it had been invested in the Vanguard
Intermediate-Term Treasury Fund. The SERP, which is a
non-qualified defined contribution plan, is unfunded and
contains a provision for acceleration of payment in the event of
a change in control. The retirement benefit, to the extent
vested upon termination of employment, will be paid in lump sum
as soon as practicable after such termination. Any unvested
portion would be forfeited. The SERP does not cover pay that is
based on commissions.
Do we
offer health and welfare benefits?
Yes. We offer the same health and welfare benefits to all
full-time employees. These benefits include medical benefits,
dental benefits, vision benefits, life insurance, salary
continuation for short-term disability, long-term disability
insurance, accidental death and dismemberment insurance,
dependent care spending account, health care spending account,
health savings account, and other similar benefits.
Do we
offer employment agreements?
Except for Mr. DeCosmo, none of our named executive
officers has an employment agreement. For a description of
Mr. DeCosmos employment agreement, see the narrative
disclosure following the Summary Compensation Table. In
addition, occasionally we may sign a letter agreement with a new
executive upon hiring, but generally they do not cover more than
the first years pay and bonus.
Do we
offer change in control agreements?
Yes. All of the named executive officers and most senior
executives have change in control/severance agreements. For a
description of the terms of these change in control/severance
agreements, see the Potential Payments Upon Termination or
Change in Control section of this proxy statement. We believe
that the change in control/severance agreements help us to
attract and retain our executives by reducing the personal
uncertainty and anxiety that arises from the possibility of a
future business combination. During a potential change in
control, we do not want executives leaving to pursue other
employment out of concern for the security of their jobs or
being unable to concentrate on their work. To enable executives
to focus on the best interest of our stockholders, we offer
change in control agreements that generally provide severance
benefits to executives whose employment terminates as a result
of a change in control.
Do we
provide perquisites to executives?
We generally do not provide perquisites to our executives that
are not available to other employees. See the Summary
Compensation Table and footnote 4 thereto for a summary of those
benefits.
Do we
offer any severance benefits for executives whose employment
terminates?
We do not have a plan or policy to provide severance benefits to
executives whose employment terminates. The CEO is the only
executive who has an employment agreement with pre-established
severance benefits, other than the change in control/severance
agreements discussed above. In return for the post-employment
benefits, the CEO agrees not to compete with us for two years
after departure.
28
Do we
have a policy on clawback of compensation?
If an executive leaves under circumstances that call into
question whether any compensation amounts paid to him or her
were validly earned, we would pursue any legal rights we deemed
appropriate under the circumstances.
Who
oversees our executive compensation? What are the roles of
executive officers in determining compensation?
Our Compensation Committee oversees executive compensation. Our
Compensation Committee is composed entirely of independent,
outside directors and establishes and administers our
compensation programs and philosophies. Our CEO and our Chief
Administrative Officer work closely with our Compensation
Committee and recommend executive compensation amounts, except
that the CEO does not participate in discussions regarding his
own compensation. Our non-executive Chairman of the Board also
participates in executive compensation discussions. Our CEO and
Chief Administrative Officer consult with the other executive
officers about compensation amounts for executives and other
employees who report to them. Our Compensation Committee has
final approval of all compensation amounts or formulas
applicable to benefit plans in which executive officers
participate.
Our Compensation Committee also:
|
|
|
|
|
establishes, administers, and approves bonus programs for
non-executive employees and approves the aggregate amount of
bonus pools for each business segment. Each executive officer
recommends individual bonus amounts for employees under his or
her direction, and the CEO approves or revises the individual
amounts;
|
|
|
|
approves all equity-based award recipients and the amount of
each award;
|
|
|
|
delegates to the CEO the responsibility for approving health and
welfare programs for all employees. Executive officers
participate in the same health and welfare programs as other
salaried employees; and
|
|
|
|
delegates to certain of our executive officers the
responsibility of maintaining the tax qualification status of
our 401(k) plan, approving 401(k) plan provisions and formulas
applicable to employees who are not executive officers, and
overseeing the administration of the 401(k) and other benefit
plans.
|
In addition, an investment committee, whose members include
executive officers, oversees 401(k) plan fund choices. This
investment committee reports annually to the Board.
Do we use
benchmarking in compensation decisions? Who is our peer
group?
We employ several methods to evaluate our executive compensation
practices relative to those in other companies. We use publicly
available market surveys to match the roles of our named
executive officers to roles in the surveys. Also, our
compensation consultant conducts an analysis of the named
executive officers to assist us with establishing a budget for
overall long-term incentive awards and to assist our
Compensation Committee with setting compensation for the named
executive officers. For further comparison, we evaluate the base
salary, annual incentive awards, and long-term incentives
provided to the named executive officers of the companies in our
peer group. We extract this data from publicly available sources.
Many of our real estate competitors are private companies so we
obtain survey data that includes private real estate companies.
Our public company peer group includes a range of companies with
various real estate development operations and land positions.
In determining our peer group, we consider various metrics
including revenues, net income, total assets, market
capitalization and acres owned. We have selected the
29
following companies for inclusion in our peer group for purposes
of evaluating public company executive compensation:
|
|
|
Allete Inc.
|
|
MDC Holdings Inc.
|
Avatar Holdings Inc.
|
|
Plum Creek Timber Company, Inc.
|
Bluegreen Corporation
|
|
Post Properties Inc.
|
BRE Properties
|
|
Potlach Corp.
|
Brookfield Homes Corp.
|
|
Rayonier Inc.
|
Consolidated-Tomoka Land Co.
|
|
The St. Joe Company
|
Cousins Properties Inc.
|
|
Tejon Ranch Company
|
Forest City Enterprises, Inc.
|
|
|
In 2010, we anticipate revising our peer group to incorporate
representation from the oil and gas sector.
Does the
Compensation Committee use a compensation consultant?
Yes. The compensation consultant provides annual market and
other specific information on executive pay and also attends our
Compensation Committee meetings on request of the Compensation
Committee. Our Compensation Committee periodically may meet in
executive session with the compensation consultant. For 2009,
our Compensation Committee engaged Hewitt as compensation
consultant.
We also retained Hewitt to prepare the change in control
calculations for disclosure in this proxy statement and on
occasion to model the number of shares to be requested for stock
incentive plans. From time to time, the compensation consultant
occasionally may perform limited assignments for us regarding
non-executive employees on a non-exclusive basis along with
other compensation consultants, although we did not engage
Hewitt to perform any such assignments in 2009. No compensation
consultant or its affiliates provided additional services to us
in excess of $120,000 during 2009.
Do we use
tally sheets?
Yes. Tally sheets for each of the named executive officers are
reviewed by our Compensation Committee for compensation each
year. These tally sheets list the executives salary,
proposed bonus and stock awards, and the 401(k) matching
contribution, retirement, health and welfare benefits.
How is
the CEOs performance evaluated? Who determines CEO
compensation?
Our full Board (excluding the CEO) completes an evaluation of
the CEO each year, which is compiled and provided to the
Compensation Committee. The Compensation Committee will report
the results of that review to the full Board (excluding the CEO)
in executive session. Factors evaluated include ROA, VC, and
other financial and non-financial performance measures and
objectives, including leadership, ethics, strategic planning,
financial results, succession planning, human resources/equal
employment opportunity, communications, external relations, and
board relations. Our independent directors determine CEO pay
with assistance from the Compensation Committee and the
compensation consultant.
30
What are
our governance practices regarding compensation
oversight?
Our governance practices divide responsibility for compensation
oversight into three levels:
|
|
|
Stockholders:
|
|
Stockholders approve all stock incentive plans. We do not have
any stock incentive plans that are not stockholder-approved.
|
Board and Compensation Committee:
|
|
Our Compensation Committee is composed entirely of independent
directors. The Compensation Committee establishes and oversees
administration of our compensation program. The Compensation
Committee ensures that stockholder-approved plans are
administered in accordance with good governance practices and
stockholder intent. The Compensation Committee is responsible
for approval of salaries, bonuses and long-term incentive
compensation paid to executive officers, bonus pools for
non-executive employees, deferred compensation plans, and
employment and change in control agreements. The full board
reviews tally sheets for the CEO, evaluates CEO performance,
approves succession plans, and acts on recommendations of the
Compensation Committee.
|
Management:
|
|
Management approves health and welfare programs for all
employees, divides bonus pool amounts approved by the
Compensation Committee into individual employee bonuses,
approves any retirement plan changes other than those for
executive officers, and administers all employee benefit and
incentive plans on a day-to-day basis. Within management, the
CEO and Chief Administrative Officer serve as liaisons with the
Compensation Committee.
|
What are
our equity award governance practices?
Our general practice is to make annual equity-based award grants
each year at the February Board meeting. From time to time, we
may grant equity-based awards to our executive officers outside
the annual award process, such as in connection with the hiring
of a new executive, for retention purposes, to reward exemplary
performance,
and/or for
promotional recognition. The CEO provides initial award
recommendations to our Compensation Committee for approval. The
Compensation Committee approves awards, including the specific
number of shares granted to specific individuals, which are
ratified by the full board and valued at the closing price of
our common stock on the NYSE on the grant date.
We do not have any program, plan or practice to time option
grants or other stock-based awards in coordination with the
release of material non-public information nor do we time the
release of material non-public information for the purpose of
affecting the value of executive compensation. Our policy for
setting the timing of stock option grants does not allow
executives to have any role in choosing the price of their
options or other stock-based awards. We do not back
date, spring load or reprice options or other
stock-based awards.
What is
our policy on Internal Revenue Code
Section 162(m)?
We intend that compensation paid to our named executive officers
not be subject to the limitation on tax deductibility under
Section 162(m) of the Code so long as this can be achieved
in a manner consistent with our other compensation objectives.
We are requesting that our stockholders re-approve the material
terms of our stock incentive plan for Section 162(m)
purposes at the 2010 annual meeting of stockholders due to the
2009 expiration of the Section 162(m) transition rule that
applied to us as a result of our spin-off from Temple-Inland.
31
What are
the effects of accounting and tax treatment of each form of
compensation on our compensation related decisions?
While the accounting and tax treatment may be a consideration
when determining compensation, our Compensation Committee
maintains the discretion to make compensation decisions that are
in the best interest of the company and its shareholders
regardless of the accounting and tax treatment.
SUMMARY
COMPENSATION TABLE
The following table contains compensation information for our
CEO, CFO and three other executive officers who for 2009 had the
highest compensation. We refer to these persons as our named
executive officers. The information includes compensation for
services to us in 2009 and 2008 and for services to
Temple-Inland and its subsidiaries for 2007. The positions
and responsibilities of our named executive officers during 2007
were significantly different than their positions and
responsibilities assumed upon our spin-off.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive
|
|
Compensation
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards(1)
|
|
Awards(1)
|
|
Plan(1)
|
|
Earnings
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)(2)
|
|
(3)(4)(5)(6)($)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
James M. DeCosmo
|
|
|
2009
|
|
|
$
|
500,000
|
|
|
$
|
|
|
|
$
|
750,000
|
|
|
$
|
749,998
|
|
|
$
|
287,000
|
|
|
|
|
|
|
$
|
31,197
|
|
|
$
|
2,318,195
|
|
President and CEO
|
|
|
2008
|
|
|
$
|
508,185
|
|
|
$
|
37,500
|
|
|
$
|
819,340
|
|
|
$
|
756,280
|
|
|
$
|
157,500
|
|
|
$
|
|
|
|
$
|
43,436
|
|
|
$
|
2,322,241
|
|
|
|
|
2007
|
|
|
$
|
307,962
|
|
|
$
|
500,000
|
|
|
$
|
|
|
|
$
|
230,072
|
|
|
$
|
|
|
|
$
|
111,978
|
(6)
|
|
$
|
24,839
|
|
|
$
|
1,174,851
|
|
Christopher L. Nines
|
|
|
2009
|
|
|
$
|
250,000
|
|
|
$
|
|
|
|
$
|
225,004
|
|
|
$
|
225,002
|
|
|
$
|
163,000
|
|
|
$
|
|
|
|
$
|
20,495
|
|
|
$
|
883,501
|
|
Chief Financial Officer
|
|
|
2008
|
|
|
$
|
242,544
|
|
|
$
|
62,500
|
|
|
$
|
248,110
|
|
|
$
|
227,906
|
|
|
$
|
77,500
|
|
|
$
|
|
|
|
$
|
25,921
|
|
|
$
|
884,481
|
|
|
|
|
2007
|
|
|
$
|
157,308
|
|
|
$
|
275,000
|
|
|
$
|
|
|
|
$
|
79,808
|
|
|
$
|
|
|
|
$
|
11,627
|
(6)
|
|
$
|
10,346
|
|
|
$
|
534,089
|
|
Craig A. Knight
|
|
|
2009
|
|
|
$
|
350,000
|
|
|
$
|
|
|
|
$
|
450,008
|
|
|
$
|
450,000
|
|
|
$
|
200,000
|
|
|
$
|
|
|
|
$
|
26,041
|
|
|
$
|
1,476,049
|
|
Chief Real Estate Officer
|
|
|
2008
|
|
|
$
|
342,053
|
|
|
$
|
81,000
|
|
|
$
|
458,715
|
|
|
$
|
679,630
|
|
|
$
|
109,000
|
|
|
$
|
|
|
|
$
|
36,503
|
|
|
$
|
1,706,901
|
|
|
|
|
2007
|
|
|
$
|
232,356
|
|
|
$
|
500,000
|
|
|
$
|
|
|
|
$
|
124,700
|
|
|
$
|
|
|
|
$
|
36,401
|
(6)
|
|
$
|
41,192
|
|
|
$
|
934,649
|
|
David M. Grimm
|
|
|
2009
|
|
|
$
|
250,000
|
|
|
$
|
|
|
|
$
|
225,004
|
|
|
$
|
225,002
|
|
|
$
|
170,000
|
|
|
$
|
|
|
|
$
|
19,900
|
|
|
$
|
889,906
|
|
Chief Administrative Officer, General
|
|
|
2008
|
|
|
$
|
248,493
|
|
|
$
|
72,500
|
|
|
$
|
248,110
|
|
|
$
|
227,906
|
|
|
$
|
77,500
|
|
|
$
|
|
|
|
$
|
22,831
|
|
|
$
|
897,340
|
|
Counsel and Secretary
|
|
|
2007
|
|
|
$
|
220,000
|
|
|
$
|
235,000
|
|
|
$
|
|
|
|
$
|
63,909
|
|
|
$
|
|
|
|
$
|
55,347
|
(6)
|
|
$
|
8,937
|
|
|
$
|
583,193
|
|
Charles D. Jehl
|
|
|
2009
|
|
|
$
|
250,000
|
|
|
$
|
|
|
|
$
|
225,004
|
|
|
$
|
225,002
|
|
|
$
|
150,000
|
|
|
$
|
|
|
|
$
|
19,481
|
|
|
$
|
869,487
|
|
Chief Accounting Officer
|
|
|
2008
|
|
|
$
|
246,263
|
|
|
$
|
62,500
|
|
|
$
|
248,110
|
|
|
$
|
227,906
|
|
|
$
|
77,500
|
|
|
$
|
|
|
|
$
|
23,097
|
|
|
$
|
885,376
|
|
|
|
|
2007
|
|
|
$
|
185,000
|
|
|
$
|
235,000
|
|
|
$
|
|
|
|
$
|
63,909
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
14,363
|
|
|
$
|
498,273
|
|
|
|
|
(1) |
|
Assumptions used in the calculation of the amounts in columns
(e) and (f) are included in Note 19 to our
audited consolidated financial statements for the year ended
December 31, 2009 included in our Annual Report on
Form 10-K
filed with the Securities and Exchange Commission on
March 3, 2010. The amounts represent the aggregate grant
date fair values of equity awards granted pursuant to our 2007
Stock Incentive Plan during the applicable year, computed in
accordance with ASC 718. The grant date fair values of
restricted stock awards subject to the 1% minimum ROA
performance condition are calculated based on the probable
outcome of such condition. |
|
(2) |
|
Represents the change in the actuarial present value of
accumulated pension benefits from September 30, 2006 to
September 30, 2007 under a Temple-Inland defined benefit
pension plan. There were no above-market or preferential
earnings on deferred compensation. Subsequent to our spin-off
from Temple-Inland, Forestar does not offer a defined benefit
pension plan. |
32
|
|
|
(3) |
|
All other compensation for 2009 includes a $8,575 tax-qualified
retirement contribution, a $4,500 401(k) company match, a $610
umbrella liability insurance policy, and the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to
|
|
|
|
|
|
|
Additional
|
|
|
Health
|
|
|
|
Contribution
|
|
|
Life
|
|
|
Spending
|
|
|
|
to SERP
|
|
|
Insurance
|
|
|
Account
|
|
|
Mr. DeCosmo
|
|
$
|
15,750
|
|
|
$
|
1,762
|
|
|
$
|
|
|
Mr. Nines
|
|
$
|
5,075
|
|
|
|
535
|
|
|
|
1,200
|
|
Mr. Knight
|
|
$
|
10,325
|
|
|
|
2,031
|
|
|
|
|
|
Mr. Grimm
|
|
$
|
5,425
|
|
|
|
790
|
|
|
|
|
|
Mr. Jehl
|
|
$
|
5,075
|
|
|
|
721
|
|
|
|
|
|
|
|
|
(4) |
|
All other compensation for 2008 includes a $8,575 tax-qualified
retirement contribution, a $4,500 401(k) company match, a $500
umbrella liability insurance policy, and the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to
|
|
|
|
|
|
|
|
|
|
Personal
|
|
|
Additional
|
|
|
Health
|
|
|
|
|
|
|
Contribution
|
|
|
use of
|
|
|
Life
|
|
|
Spending
|
|
|
Country
|
|
|
|
to SERP
|
|
|
Aircraft
|
|
|
Insurance
|
|
|
Account
|
|
|
Club Dues
|
|
|
Mr. DeCosmo
|
|
$
|
27,236
|
|
|
$
|
1,140
|
|
|
$
|
1,600
|
|
|
$
|
|
|
|
$
|
410
|
|
Mr. Nines
|
|
$
|
10,064
|
|
|
|
|
|
|
|
535
|
|
|
|
1,200
|
|
|
|
1,072
|
|
Mr. Knight
|
|
$
|
21,422
|
|
|
|
|
|
|
|
2,031
|
|
|
|
|
|
|
|
|
|
Mr. Grimm
|
|
$
|
8,872
|
|
|
|
|
|
|
|
790
|
|
|
|
|
|
|
|
119
|
|
Mr. Jehl
|
|
$
|
8,794
|
|
|
|
|
|
|
|
701
|
|
|
|
|
|
|
|
552
|
|
|
|
|
|
|
Beginning in 2008, we no longer provide our executives with
country club memberships or car allowances. The above country
club dues represent 2007 country club charges reimbursed to our
executives in 2008. |
|
(5) |
|
All other compensation for 2007 includes a $4,000 401(k) company
match, matching gifts for charitable contributions under a
Temple-Inland charitable foundation program, and for
Mr. Knight, a contribution by Temple-Inland of $19,508 to a
defined contribution pension plan. Other perquisites for 2007
are as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
|
|
|
Contribution to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
|
|
|
|
|
|
|
|
|
|
|
|
Relocation
|
|
|
Health
|
|
|
Umbrella
|
|
|
Retirement
|
|
|
Additional
|
|
|
|
|
|
|
use of
|
|
|
Attorneys
|
|
|
Country
|
|
|
Car
|
|
|
Mortgage
|
|
|
Spending
|
|
|
Liability
|
|
|
Contributions to
|
|
|
Life
|
|
|
|
|
|
|
Aircraft
|
|
|
Fees
|
|
|
Club Dues
|
|
|
Allowance
|
|
|
Subsidy
|
|
|
Account
|
|
|
Insurance
|
|
|
401(k) Plan
|
|
|
Insurance
|
|
|
Other
|
|
|
Mr. DeCosmo
|
|
$
|
1,045
|
|
|
$
|
1,902
|
|
|
$
|
4,904
|
|
|
$
|
954
|
|
|
$
|
8,321
|
|
|
$
|
|
|
|
$
|
750
|
|
|
$
|
|
|
|
$
|
2,850
|
|
|
$
|
113
|
|
Mr. Nines
|
|
|
|
|
|
|
|
|
|
|
3,930
|
|
|
|
|
|
|
|
|
|
|
|
550
|
|
|
|
750
|
|
|
|
|
|
|
|
1,033
|
|
|
|
83
|
|
Mr. Knight
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
500
|
|
|
|
7,875
|
|
|
|
1,683
|
|
|
|
126
|
|
Mr. Grimm
|
|
|
|
|
|
|
|
|
|
|
1,875
|
|
|
|
|
|
|
|
1,543
|
|
|
|
|
|
|
|
500
|
|
|
|
|
|
|
|
870
|
|
|
|
149
|
|
Mr. Jehl
|
|
|
|
|
|
|
|
|
|
|
2,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500
|
|
|
|
6,478
|
|
|
|
1,185
|
|
|
|
|
|
|
|
|
(6) |
|
Incremental cost of personal use of aircraft includes fuel
costs, engine maintenance expenses, crew expenses, ground fees
and other miscellaneous expenses such as meals. In 2007,
reflects personal usage of Temple-Inland aircraft, and in 2008,
reflects personal usage of our 15% undivided interest in
Temple-Inland aircraft acquired in connection with our spin-off. |
33
2009
GRANTS OF PLAN-BASED AWARDS
The following table summarizes 2009 grants of stock-based
compensation awards and non-equity incentive awards made to the
named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible
|
|
Number of
|
|
Number of
|
|
Base
|
|
Value of
|
|
|
Equity
|
|
|
|
Payouts Under Non-Equity
|
|
Shares of
|
|
Securities
|
|
Price of
|
|
Stock and
|
|
|
Award
|
|
|
|
Incentive Plan Awards(1)
|
|
Stock or
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
Grant
|
|
Type of
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Date
|
|
Award
|
|
($)
|
|
($)
|
|
($)
|
|
(#)(2)
|
|
(#)(3)
|
|
($/Sh)
|
|
(4)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
Mr. DeCosmo
|
|
|
|
|
|
Annual Bonus
|
|
$
|
130,000
|
|
|
$
|
287,000
|
|
|
$
|
1,620,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/10/09
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,366
|
|
|
|
|
|
|
$
|
|
|
|
$
|
375,000
|
|
|
|
|
2/10/09
|
|
|
RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,366
|
|
|
|
|
|
|
$
|
|
|
|
$
|
375,000
|
|
|
|
|
2/10/09
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,010
|
|
|
$
|
9.29
|
|
|
$
|
232,499
|
|
|
|
|
2/10/09
|
|
|
SARs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,345
|
|
|
$
|
9.29
|
|
|
$
|
517,499
|
|
Mr. Nines
|
|
|
|
|
|
Annual Bonus
|
|
$
|
70,000
|
|
|
$
|
163,000
|
|
|
$
|
810,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/10/09
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,110
|
|
|
|
|
|
|
$
|
|
|
|
$
|
112,502
|
|
|
|
|
2/10/09
|
|
|
RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,110
|
|
|
|
|
|
|
$
|
|
|
|
$
|
112,502
|
|
|
|
|
2/10/09
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,703
|
|
|
$
|
9.29
|
|
|
$
|
69,750
|
|
|
|
|
2/10/09
|
|
|
SARs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,404
|
|
|
$
|
9.29
|
|
|
$
|
155,252
|
|
Mr. Knight
|
|
|
|
|
|
Annual Bonus
|
|
$
|
140,000
|
|
|
$
|
200,000
|
|
|
$
|
1,700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/10/09
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,220
|
|
|
|
|
|
|
$
|
|
|
|
$
|
225,004
|
|
|
|
|
2/10/09
|
|
|
RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,220
|
|
|
|
|
|
|
$
|
|
|
|
$
|
225,004
|
|
|
|
|
2/10/09
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,406
|
|
|
$
|
9.29
|
|
|
$
|
139,500
|
|
|
|
|
2/10/09
|
|
|
SARs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,807
|
|
|
|
9.29
|
|
|
|
310,500
|
|
Mr. Grimm
|
|
|
|
|
|
Annual Bonus
|
|
$
|
70,000
|
|
|
$
|
170,000
|
|
|
$
|
810,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/10/09
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
12,110
|
|
|
|
|
|
|
$
|
|
|
|
$
|
112,502
|
|
|
|
|
2/10/09
|
|
|
RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,110
|
|
|
|
|
|
|
$
|
|
|
|
$
|
112,502
|
|
|
|
|
2/10/09
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,703
|
|
|
$
|
9.29
|
|
|
$
|
69,750
|
|
|
|
|
2/10/09
|
|
|
SARs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,404
|
|
|
$
|
9.29
|
|
|
$
|
152,252
|
|
Mr. Jehl
|
|
|
|
|
|
Annual Bonus
|
|
$
|
70,000
|
|
|
$
|
150,000
|
|
|
$
|
810,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/10/09
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,110
|
|
|
|
|
|
|
$
|
|
|
|
$
|
112,502
|
|
|
|
|
2/10/09
|
|
|
RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,110
|
|
|
|
|
|
|
$
|
|
|
|
$
|
112,502
|
|
|
|
|
2/10/09
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,703
|
|
|
$
|
9.29
|
|
|
$
|
69,750
|
|
|
|
|
2/10/09
|
|
|
SARs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,404
|
|
|
$
|
9.29
|
|
|
$
|
155,252
|
|
|
|
|
(1) |
|
The amounts shown in column (d) reflect the minimum
threshold possible payment under our annual incentive program
for 2009, which is based on our achievement of a 4% ROA, and
assumes that the named executive officers value creation
performance merited the full VC component percentage. The
amounts shown in column (f) reflect the maximum threshold
possible payment under our annual incentive program for 2009,
which is based on our achievement of a 24% ROA, and assumes that
the named executive officers value creation performance
merited the full VC component percentage. The amounts shown in
column (e) are based on the actual 2009 performance because
the annual incentive program uses a sliding scale with no
specific target amounts. For the 2009 annual incentive program,
our Compensation Committee elected to pay the incentive
one-third in cash and two-thirds in restricted stock, which
restricted stock will vest one-third on each of the first three
anniversaries of the date of grant. Because this determination
(and the related grant) was made in February 2010, only the cash
portion of the 2009 annual incentive is being reported in the
Summary Compensation Table and the above table for 2009. The
restricted stock portion of the 2009 annual incentive will be
reported in the Summary Compensation Table and Grants of
Plan-Based Awards Table as a 2010 grant in our 2011 proxy
statement. For more information regarding our annual incentive
program, see the Compensation Discussion and
Analysis section of this proxy statement. |
34
|
|
|
(2) |
|
All restricted stock and RSUs awarded to the executives will
vest on February 10, 2012, subject to satisfaction of a 1%
minimum ROA performance condition. All grants to the named
executive officers include a provision for acceleration of
vesting in certain change of control situations. RSUs will be
settled for cash. |
|
(3) |
|
All options and SARs awarded to the executives become
exercisable in 25% increments on February 10 of 2010, 2011, 2012
and 2013 and have a ten year term expiring February 10,
2019. All grants to the named executive officers include a
provision for acceleration of vesting in certain change of
control situations. For options to purchase our common stock,
shares may be withheld to pay taxes. SARs will be settled in
cash. |
|
(4) |
|
The amounts in column (j) are valued based on the aggregate
grant date fair value of the award determined pursuant to ASC
718. Assumptions used in the calculation of the amounts in this
column (j) are included in Note 19 to our audited
consolidated financial statements for the year ended
December 31, 2009 included in our Annual Report on
Form 10-K
filed with the Securities and Exchange Commission on
March 3, 2010. |
Narrative
to Summary Compensation Table and Grants of Plan-Based Awards
Tables
Compensation
Elements in Proportion to Total Compensation
In 2009, salary accounted for approximately 19% of
the total compensation of the named executive officers,
bonus accounted for approximately 35% of the total
compensation of the named executive officers, incentive
compensation (including both equity and non-equity) accounted
for approximately 45% of the total compensation of the named
executive officers, and other compensation accounted for
approximately 1% of the total compensation of the named
executive officers. Please see the Compensation Discussion
and Analysis section of this proxy statement for a
description of the objectives of our compensation program and
our overall compensation philosophy.
Employment
Agreements
Except for Mr. DeCosmo, we have not entered into employment
agreements with any of our named executive officers.
Prior to our 2007 spin-off, we executed an employment agreement
with Mr. DeCosmo that became effective as of the spin-off.
The agreement has a three-year term, but is automatically
extended by one year on the first anniversary of the effective
date and each anniversary thereafter unless notice of nonrenewal
is given at least one year in advance of such anniversary date.
During the term of the agreement, Mr. DeCosmo will receive
a base salary, which may not be reduced below its level at the
time the agreement became effective ($500,000) or any increase
subsequently granted. He is eligible for a performance-based
annual bonus, employee benefits, equity (long-term incentive
plan) grants, and umbrella insurance. There are no parameters on
the performance-based annual bonus, such as a maximum amount,
and it is entirely within the discretion of our Compensation
Committee except that it shall be substantially no less
favorable than the bonus program applicable to our other senior
executives.
Upon a qualifying termination of employment (defined generally
in the same manner as under the change in control agreements
described in the Potential Payments Upon Termination or Change
in Control section of this proxy statement) within two years
following a change in control (defined in the same manner as
under the change in control agreements described in the
Potential Payments Upon Termination or Change in Control section
of this proxy statement), Mr. DeCosmo would be generally
entitled to the same benefits (including excise tax
gross-up
protection) as described under the change in control agreements
in the Potential Payments Upon Termination or Change in Control
section of this proxy statement, except that Mr. DeCosmo
would receive a multiple of three times pay and benefits, and
also would be credited with three extra years of service for
purposes of determining his eligibility for any retiree medical
or life insurance benefits. At this time, we do not offer
retiree medical benefits. If Mr. DeCosmo were to experience
such a qualifying termination of employment not within two years
following a change in control, he would be entitled to those
same benefits,
35
except that the severance would be based on two times salary and
bonus, health and welfare benefits and perquisites would
continue for two years, and imputed service credit would be
limited to an additional two years. Upon termination of
employment for death or disability, Mr. DeCosmo would
receive a cash lump-sum payment equal to the sum of his annual
base salary and a pro-rata portion of his annual target bonus.
Mr. DeCosmo would be required to execute a release of
claims, and he has agreed that he will not compete with us for
two years following his termination of employment for any reason.
OUTSTANDING
EQUITY AWARDS AT YEAR-END 2009
The following table summarizes stock-based compensation awards
to acquire our common stock outstanding at December 31,
2009 for the named executive officers. Some awards arise out of
equitable adjustment to Temple-Inland awards in connection with
the spin-off.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Plans:
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Value of
|
|
Number of
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
of Shares
|
|
Shares
|
|
Unearned
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
or Units
|
|
or Units
|
|
Shares,
|
|
Unearned
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
of Stock
|
|
of Stock
|
|
Units or
|
|
Shares,
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
That
|
|
That
|
|
Other
|
|
Units or
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
|
|
Have
|
|
Have
|
|
Rights
|
|
Other Rights
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
Not
|
|
Not
|
|
That Have
|
|
That Have
|
|
|
|
|
Options (#)
|
|
Options (#)
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
|
Not Vested
|
|
Not Vested
|
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
($)
|
|
Date
|
|
(#)
|
|
($)
|
|
(#)
|
|
(#)(1)
|
|
Vesting Date
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
Mr. DeCosmo
|
|
|
833
|
|
|
|
|
|
|
$
|
11.76
|
|
|
|
02/02/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
13.26
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
1,666
|
|
|
|
|
|
|
|
8.68
|
|
|
|
02/07/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
1,666
|
|
|
|
|
|
|
|
15.02
|
|
|
|
02/06/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
5,333
|
|
|
|
|
|
|
|
20.26
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
4,612
|
|
|
|
1,538
|
|
|
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
3,075
|
|
|
|
3,075
|
|
|
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
18,500
|
|
|
|
55,500
|
|
|
|
28.85
|
|
|
|
02/12/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
59,010
|
|
|
|
9.29
|
|
|
|
02/10/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
131,345
|
|
|
|
9.29
|
|
|
|
02/10/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,666
|
|
|
$
|
146,519
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,333
|
|
|
$
|
183,159
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,400
|
|
|
$
|
624,232
|
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,366
|
|
|
$
|
887,245
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,366
|
|
|
$
|
887,245
|
|
|
|
(11
|
)
|
Mr. Nines
|
|
|
333
|
|
|
|
|
|
|
$
|
9.83
|
|
|
|
08/01/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
833
|
|
|
|
|
|
|
|
15.02
|
|
|
|
02/06/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
1,250
|
|
|
|
|
|
|
|
20.26
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
1,600
|
|
|
|
533
|
|
|
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
1,066
|
|
|
|
1,067
|
|
|
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13
|
)
|
|
|
|
5,575
|
|
|
|
16,725
|
|
|
|
28.85
|
|
|
|
02/12/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
17,703
|
|
|
|
9.29
|
|
|
|
02/10/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
39,404
|
|
|
|
9.29
|
|
|
|
02/10/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
875
|
|
|
$
|
19,233
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,600
|
|
|
$
|
189,028
|
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,110
|
|
|
$
|
266,178
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,110
|
|
|
$
|
266,178
|
|
|
|
(11
|
)
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Plans:
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Value of
|
|
Number of
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
of Shares
|
|
Shares
|
|
Unearned
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
or Units
|
|
or Units
|
|
Shares,
|
|
Unearned
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
of Stock
|
|
of Stock
|
|
Units or
|
|
Shares,
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
That
|
|
That
|
|
Other
|
|
Units or
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
|
|
Have
|
|
Have
|
|
Rights
|
|
Other Rights
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
Not
|
|
Not
|
|
That Have
|
|
That Have
|
|
|
|
|
Options (#)
|
|
Options (#)
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
|
Not Vested
|
|
Not Vested
|
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
($)
|
|
Date
|
|
(#)
|
|
($)
|
|
(#)
|
|
(#)(1)
|
|
Vesting Date
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
Mr. Knight
|
|
|
833
|
|
|
|
|
|
|
$
|
11.76
|
|
|
|
02/02/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
1,666
|
|
|
|
|
|
|
|
13.26
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
2,500
|
|
|
|
|
|
|
|
8.68
|
|
|
|
02/07/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
1,666
|
|
|
|
|
|
|
|
15.02
|
|
|
|
02/06/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
1,666
|
|
|
|
|
|
|
|
20.26
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
2,500
|
|
|
|
833
|
|
|
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16
|
)
|
|
|
|
1,666
|
|
|
|
1,667
|
|
|
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17
|
)
|
|
|
|
16,625
|
|
|
|
49,875
|
|
|
|
28.85
|
|
|
|
02/12/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
35,406
|
|
|
|
9.29
|
|
|
|
02/10/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
78,807
|
|
|
|
9.29
|
|
|
|
02/10/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,333
|
|
|
$
|
95,239
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,900
|
|
|
$
|
349,482
|
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,220
|
|
|
$
|
532,356
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,220
|
|
|
$
|
532,356
|
|
|
|
(11
|
)
|
Mr. Grimm
|
|
|
666
|
|
|
|
|
|
|
$
|
13.26
|
|
|
|
02/01/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
533
|
|
|
|
|
|
|
|
9.83
|
|
|
|
08/01/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
400
|
|
|
|
|
|
|
|
15.02
|
|
|
|
02/06/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
533
|
|
|
|
|
|
|
|
20.26
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
1,281
|
|
|
|
427
|
|
|
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19
|
)
|
|
|
|
854
|
|
|
|
854
|
|
|
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20
|
)
|
|
|
|
5,575
|
|
|
|
16,725
|
|
|
|
28.85
|
|
|
|
02/12/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
17,703
|
|
|
|
9.29
|
|
|
|
02/10/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
39,404
|
|
|
|
9.29
|
|
|
|
02/10/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700
|
|
|
$
|
15,386
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,600
|
|
|
$
|
189,028
|
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,110
|
|
|
$
|
266,178
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,110
|
|
|
$
|
266,178
|
|
|
|
(11
|
)
|
Mr. Jehl
|
|
|
166
|
|
|
|
|
|
|
$
|
9.83
|
|
|
|
08/01/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
266
|
|
|
|
|
|
|
|
15.02
|
|
|
|
02/06/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
400
|
|
|
|
|
|
|
|
20.26
|
|
|
|
02/04/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
1,281
|
|
|
|
427
|
|
|
|
27.06
|
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19
|
)
|
|
|
|
854
|
|
|
|
854
|
|
|
|
30.56
|
|
|
|
02/02/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20
|
)
|
|
|
|
5,575
|
|
|
|
16,725
|
|
|
|
28.85
|
|
|
|
02/12/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
17,703
|
|
|
|
9.29
|
|
|
|
02/10/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
39,404
|
|
|
|
9.29
|
|
|
|
02/10/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700
|
|
|
$
|
15,386
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,600
|
|
|
$
|
189,028
|
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,110
|
|
|
$
|
266,178
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.110
|
|
|
$
|
266,178
|
|
|
|
(11
|
)
|
|
|
|
(1) |
|
Value based on the closing market price of our common stock as
reported on the NYSE on December 31, 2009 of $21.98. Market
value shown assumes all performance criteria are met and the
maximum value is paid. |
|
(2) |
|
Stock options to acquire 4,612 shares of our common stock
are fully vested and exercisable; stock options to acquire
1,538 shares of our common stock will vest on
February 3, 2010. |
|
(3) |
|
Stock options to acquire 3,075 shares are fully vested and
exercisable; stock options to acquire 1,537 and
1,538 shares will vest on each of February 2, 2010 and
2011, respectively. |
37
|
|
|
(4) |
|
Stock options to acquire 18,500 shares are fully vested and
exercisable; stock options to acquire 18,500 shares will
vest on each of February 12, 2010, 2011 and 2012. |
|
(5) |
|
Stock options granted February 10, 2009 will vest 25% on
each of the first four anniversaries of the grant date. |
|
(6) |
|
Stock appreciation rights payable in cash granted
February 10, 2009 will vest 25% on each of the first four
anniversaries of the grant date. |
|
(7) |
|
The restricted stock unit award vests on February 2, 2010
if a minimum 1% ROI criteria is met. The restricted stock unit
award will be settled in cash as it vests based on the fair
market value on the vesting date. |
|
(8) |
|
The restricted stock unit award vests on May 4, 2010 if a
minimum 1% ROI criteria is met. The restricted stock unit award
will be settled in cash as it vests based on the fair market
value on the vesting date. |
|
(9) |
|
The restricted stock award vests on February 12, 2011 if a
minimum 1% ROA criteria is met. |
|
(10) |
|
The restricted stock award vests on February 10, 2012 if a
minimum 1% ROA criteria is met. |
|
(11) |
|
The restricted stock unit award vests on February 10, 2012
if a minimum 1% of ROI criteria is met. The restricted stock
unit award will be settled in cash as it vests based on the fair
market value on the vesting date. |
|
(12) |
|
Stock options to acquire 1,600 shares of our common stock
are fully vested and exercisable; stock options to acquire
533 shares of our common stock will vest on
February 3, 2010. |
|
(13) |
|
Stock options to acquire 1,066 shares are fully vested and
exercisable; stock options to acquire 534 and 533 shares of
our common stock will vest on February 2, 2010 and 2011,
respectively. |
|
(14) |
|
Stock options to acquire 5,575 shares of our common stock
are fully vested and exercisable; stock options to acquire
5,575 shares of our common stock will vest on each of
February 12, 2010, 2011 and 2012. |
|
(15) |
|
The restricted stock unit award vests on February 2, 2010.
The restricted stock unit award will be settled in cash as it
vests based on the fair market value on the vesting date. |
|
(16) |
|
Stock options to acquire 2,500 shares of our common stock
are fully vested and exercisable; stock options to acquire
833 shares of our common stock will vest on
February 3, 2010. |
|
(17) |
|
Stock options to acquire 1,666 shares are fully vested and
exercisable; stock options to acquire 834 and 833 shares of
our common stock will vest on February 2, 2010 and 2011,
respectively. |
|
(18) |
|
Stock options to acquire 16,625 shares of our common stock
are fully vested and exercisable; stock options to acquire
16,625 shares of our common stock will vest on each of
February 12, 2010, 2011 and 2012. |
|
(19) |
|
Stock options to acquire 1,281 shares of our common stock
are fully vested and exercisable; stock options to acquire
427 shares of our common stock will vest on
February 3, 2010. |
|
(20) |
|
Stock options to acquire 854 shares are fully vested and
exercisable; stock options to acquire 427 shares of our
common stock will vest on each of February 2, 2010 and 2011. |
38
2009
OPTION EXERCISES AND STOCK VESTED
The following table summarizes stock-based compensation awards
exercised or vested in 2009 by the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on Exercise
|
|
|
Upon Exercise
|
|
|
Acquired on Vesting
|
|
|
Upon Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
Mr. DeCosmo
|
|
|
666
|
|
|
$
|
4,036
|
|
|
|
6,133
|
|
|
$
|
59,976
|
|
Mr. Nines
|
|
|
|
|
|
$
|
|
|
|
|
875
|
|
|
$
|
10,859
|
|
Mr. Knight
|
|
|
3,333
|
|
|
$
|
19,031
|
|
|
|
4,166
|
|
|
$
|
38,702
|
|
Mr. Grimm
|
|
|
|
|
|
$
|
|
|
|
|
700
|
|
|
$
|
8,687
|
|
Mr. Jehl
|
|
|
|
|
|
$
|
|
|
|
|
700
|
|
|
$
|
8,687
|
|
All option or stock awards exercised or vested in 2009 relate to
pre-spin awards arising out of equitable adjustment to
Temple-Inland awards in connection with the spin-off.
Messrs. DeCosmos and Knights option awards were
subject to expiration in 2009. All stock awards were restricted
stock units settled in accordance with their original terms.
NONQUALIFIED
DEFERRED COMPENSATION
The following table summarizes nonqualified deferred
compensation for the year 2009 for the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Earnings
|
|
|
Withdrawals/
|
|
|
Balance
|
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
Distributions
|
|
|
at Last FYE
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
Mr. DeCosmo
|
|
$
|
|
|
|
$
|
15,750
|
|
|
$
|
3,628
|
|
|
$
|
|
|
|
$
|
46,614
|
|
Mr. Nines
|
|
$
|
|
|
|
$
|
5,075
|
|
|
$
|
1,341
|
|
|
$
|
|
|
|
$
|
16,480
|
|
Mr. Knight
|
|
$
|
|
|
|
$
|
10,325
|
|
|
$
|
2,853
|
|
|
$
|
|
|
|
$
|
34,600
|
|
Mr. Grimm
|
|
$
|
|
|
|
$
|
5,425
|
|
|
$
|
1,182
|
|
|
$
|
|
|
|
$
|
15,479
|
|
Mr. Jehl
|
|
$
|
|
|
|
$
|
5,075
|
|
|
$
|
1,171
|
|
|
$
|
|
|
|
$
|
15,041
|
|
|
|
|
(1) |
|
All contributions were made pursuant to our supplemental
executive retirement plan, or SERP, a nonqualified defined
contribution plan. The Internal Revenue Code limits the amount
of compensation that can be used in calculations under a
tax-qualified defined contribution retirement plan such as our
401(k) plan. In 2009 this limit was $245,000. As a result, any
retirement benefits that cannot be paid under our tax-qualified
defined contribution retirement plan due to these limitations
are paid under the SERP. The SERP is unfunded and contains a
provision for acceleration of payment in the event of a change
in control. The retirement benefit, to the extent vested upon
termination of employment, will be paid in lump-sum as soon as
practicable after such termination. Any unvested portion would
be forfeited. |
|
(2) |
|
Our SERP provides that earnings are credited annually on January
1 based on the balances as of the prior year-end based on the
rate earned under Vanguards Intermediate-Term Treasury
Fund, the same fund used in the underlying tax-qualified plan.
This fund was selected when our SERP was adopted prior to our
spin-off and our executives do not participate in setting the
rate or the timing of payment. |
|
|
|
|
39
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
We have change in control/severance agreements with our named
executive officers, other than the CEO. The CEO is party to an
employment agreement with change in control provisions, the
terms of which are summarized above. These agreements generally
require a double trigger of both a change in control
and a termination of employment before any benefits are paid.
The following events constitute a change in control for purposes
of the change in control/severance agreements:
|
|
|
|
|
any person or entity acquiring or becoming beneficial owner as
defined in SEC regulations of 20% or more of the combined voting
power of our securities;
|
|
|
|
the directors as of the date of the spin-off (and any subsequent
directors nominated or appointed by at least two-thirds of the
incumbent directors) ceasing to constitute a majority of our
directors within any
24-month
period;
|
|
|
|
consummation of a merger, consolidation, or recapitalization
(unless the pre-event directors continue to represent a majority
of the directors on the post-event board, at least 60% of the
pre-event ownership survives, and, in the event of a
recapitalization, no person owns 20% or more of the voting power
of the securities (except to the extent such ownership existed
pre-event));
|
|
|
|
the stockholders approve a liquidation or dissolution;
|
|
|
|
consummation of an agreement to sell, lease, or dispose of
substantially all our assets; or
|
|
|
|
any other event that the Board determines to be a change in
control.
|
Our 2007 Stock Incentive Plan uses similar change in control
events.
As noted above, payments under the change in control/severance
agreements are generally triggered by two events, a change in
control plus a qualifying termination of employment. A
qualifying termination of employment includes both involuntary
termination by us without cause and voluntary termination by the
executive for good reason. Cause includes willful and continued
failure by executive to substantially perform executives
duties after written demand for substantial performance by the
Board or willful engaging in conduct that is demonstrably and
materially injurious to us, monetarily or otherwise. Good reason
includes assignment of duties substantially inconsistent with
the executives status as a senior executive officer,
material adverse alteration in the nature or status of the
executives responsibilities, material reduction in base
salary, relocation of principal place of employment more than
50 miles, or, during the two-year period following a change
of control, failure to timely pay compensation or failure to
provide benefits or a reduction in benefits to which executive
was entitled pre-event. A qualifying termination will be deemed
to have occurred after a change in control if the
executives employment is terminated without cause or
executive terminates for good reason before a change in control
and such termination without cause or event giving rise to good
reason was at the request of a person or entity that entered
into an agreement with us, the consummation of which would
result in a change of control.
Under the change in control/severance agreements and 2007 Stock
Incentive Plan, the named executive officers other than
Mr. DeCosmo would receive the following under qualifying
circumstances:
|
|
|
|
|
their current cycle annual incentive bonus pro rated if the
termination is before the end of the first half of the cycle or
full annual incentive bonus if termination is during the second
half of the cycle (and assuming achievement of performance goals
at the target level);
|
|
|
|
lump sum severance equal to two times their current salary and
two times target bonus, or if higher, the salary or actual bonus
in any of the last three years;
|
|
|
|
health and welfare benefits provided for two years at no greater
cost;
|
|
|
|
acceleration of vesting of all options, SARs, restricted shares,
restricted stock units, and performance stock units;
|
40
|
|
|
|
|
two years of additional service credit for SERP benefits, if any;
|
|
|
|
lump sum payment equal to two years match under our 401(k)
plan;
|
|
|
|
any retiree benefits to which the executive is entitled;
|
|
|
|
reimbursement for outplacement services for one year not to
exceed 15% of base salary and target bonus, or if higher, the
salary or actual bonus in any of the last three years; and
|
|
|
|
two years continuation of current perquisites.
|
The change in control/severance agreements entered into prior to
2008 also contain
gross-up
provisions in the event the officer is required to pay excise
tax on these amounts. The gross up will only be paid if the
change in control payments exceed 110% of the amount that would
not be subject to excise tax; otherwise, payments are reduced to
the maximum amount that will not trigger the excise tax.
Beginning in 2008, any new change in control/severance
agreements do not contain tax
gross-up
provisions.
The Temple-Inland Compensation Committee (for agreements entered
into prior to our spin-off) or our Compensation Committee (for
agreements entered into after the spin-off) determined that the
amount of severance and benefits represented competitive market
practices for executives at this level. Executives at this level
generally require a longer timeframe to find comparable jobs
because there are fewer jobs at this level in the market. The
executives often have a substantial percentage of their personal
wealth dependent on the status of our company, given the
requirement to hold a multiple of their salary in stock and the
fact that a large part of their compensation is stock-based.
In exchange for the promise of this compensation and benefits,
the executive agrees to continue working during any potential
change in control event until the earliest of six months from
the potential change in control event, until the date of the
change in control event, or until the executive is terminated by
the company or terminates employment for good reason.
We believe that the change in control/severance agreements help
us to attract and retain our executives by reducing the personal
uncertainty and anxiety that arises from the possibility of a
future business combination. During a potential change in
control, we do not want executives leaving to pursue other
employment out of concern for the security of their jobs or
being unable to concentrate on their work. To enable executives
to focus on the best interest of our stockholders, we offer
change in control agreements that generally provide severance
benefits to executives whose employment terminates as a result
of a change in control.
The following table summarizes the estimated amounts our named
executive officers would have become entitled to under our
change in control and termination agreements assuming different
termination events occurred at December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Value of
|
|
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
Stock
|
|
|
Restricted
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
Options
|
|
|
Stock
|
|
|
That
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise
|
|
|
|
|
|
|
|
|
|
Payment
|
|
|
That
|
|
|
That
|
|
|
Vests
|
|
|
Retirement
|
|
|
Welfare
|
|
|
|
|
|
|
|
|
Tax &
|
|
|
Aggregate
|
|
|
|
Severance
|
|
|
(1)
|
|
|
Vest
|
|
|
Vests
|
|
|
(2)
|
|
|
Benefits
|
|
|
Benefits
|
|
|
Outplacement
|
|
|
Perquisites
|
|
|
Gross-Up
|
|
|
Payments
|
|
|
Mr. DeCosmo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change In Control(3)
|
|
$
|
3,720,000
|
|
|
$
|
860,000
|
|
|
$
|
2,415,607
|
|
|
|
|
|
|
$
|
2,728,400
|
|
|
$
|
86,475
|
|
|
$
|
31,599
|
|
|
$
|
75,000
|
|
|
$
|
610
|
|
|
$
|
3,175,341
|
|
|
$
|
13,093,032
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
$
|
2,415,607
|
|
|
|
|
|
|
$
|
2,728,400
|
|
|
$
|
15,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,159,757
|
|
Death(4)
|
|
$
|
500,000
|
|
|
$
|
860,000
|
|
|
$
|
2,415,607
|
|
|
|
|
|
|
$
|
2,728,400
|
|
|
$
|
15,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,519,757
|
|
Disability(4)
|
|
$
|
500,000
|
|
|
$
|
860,000
|
|
|
$
|
2,415,607
|
|
|
|
|
|
|
$
|
2,728,400
|
|
|
$
|
15,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,519,757
|
|
Termination for Good Reason(5)
|
|
$
|
2,000,000
|
|
|
$
|
860,000
|
|
|
$
|
2,415,607
|
|
|
|
|
|
|
$
|
2,728,400
|
|
|
$
|
86,475
|
|
|
$
|
31,599
|
|
|
$
|
75,000
|
|
|
$
|
610
|
|
|
$
|
3,175,341
|
|
|
$
|
11,373,032
|
|
Termination With or Without Cause(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,750
|
|
Mr. Nines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change In Control(3)
|
|
$
|
1,100,000
|
|
|
$
|
490,000
|
|
|
$
|
724,687
|
|
|
$
|
19,233
|
|
|
$
|
721,384
|
|
|
$
|
36,300
|
|
|
$
|
29,354
|
|
|
$
|
82,500
|
|
|
$
|
610
|
|
|
$
|
946,113
|
|
|
$
|
4,150,181
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
$
|
724,687
|
|
|
$
|
19,233
|
|
|
$
|
721,384
|
|
|
$
|
5,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,470,379
|
|
Death(4)
|
|
|
|
|
|
|
|
|
|
$
|
724,687
|
|
|
$
|
19,233
|
|
|
$
|
721,384
|
|
|
$
|
5,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,470,379
|
|
Disability(4)
|
|
|
|
|
|
|
|
|
|
$
|
724,687
|
|
|
$
|
19,233
|
|
|
$
|
721,384
|
|
|
$
|
5,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,470,379
|
|
Termination With or Without Cause(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,075
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Value of
|
|
|
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
Stock
|
|
|
Restricted
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
Options
|
|
|
Stock
|
|
|
That
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise
|
|
|
|
|
|
|
|
|
|
Payment
|
|
|
That
|
|
|
That
|
|
|
Vests
|
|
|
Retirement
|
|
|
Welfare
|
|
|
|
|
|
|
|
|
Tax &
|
|
|
Aggregate
|
|
|
|
Severance
|
|
|
(1)
|
|
|
Vest
|
|
|
Vests
|
|
|
(2)
|
|
|
Benefits
|
|
|
Benefits
|
|
|
Outplacement
|
|
|
Perquisites
|
|
|
Gross-Up
|
|
|
Payments
|
|
|
Mr. Knight
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change In Control(3)
|
|
$
|
1,800,000
|
|
|
$
|
600,000
|
|
|
$
|
1,449,362
|
|
|
|
|
|
|
$
|
1,509,433
|
|
|
$
|
46,800
|
|
|
$
|
21,066
|
|
|
$
|
135,000
|
|
|
$
|
610
|
|
|
$
|
1,625,706
|
|
|
$
|
7,187,977
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
$
|
1,449,362
|
|
|
|
|
|
|
$
|
1,509,433
|
|
|
$
|
10,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,969,120
|
|
Death(4)
|
|
|
|
|
|
|
|
|
|
$
|
1,449,362
|
|
|
|
|
|
|
$
|
1,509,433
|
|
|
$
|
10,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,969,120
|
|
Disability(4)
|
|
|
|
|
|
|
|
|
|
$
|
1,449,362
|
|
|
|
|
|
|
$
|
1,509,433
|
|
|
$
|
10,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,969,120
|
|
Termination With or Without Cause(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,325
|
|
Mr. Grimm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Control(3)
|
|
$
|
1,000,000
|
|
|
$
|
510,000
|
|
|
$
|
724,687
|
|
|
$
|
15,386
|
|
|
$
|
721,384
|
|
|
$
|
37,000
|
|
|
$
|
26,954
|
|
|
$
|
75,000
|
|
|
$
|
610
|
|
|
$
|
888,809
|
|
|
$
|
3,999,830
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
$
|
724,687
|
|
|
$
|
15,386
|
|
|
$
|
721,384
|
|
|
$
|
5,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,466,882
|
|
Death(4)
|
|
|
|
|
|
|
|
|
|
$
|
724,687
|
|
|
$
|
15,386
|
|
|
$
|
721,384
|
|
|
$
|
5,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,466,882
|
|
Disability(4)
|
|
|
|
|
|
|
|
|
|
$
|
724,687
|
|
|
$
|
15,386
|
|
|
$
|
721,384
|
|
|
$
|
5,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,466,882
|
|
Termination With or Without Cause(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,425
|
|
Mr. Jehl
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change In Control(3)
|
|
$
|
1,100,000
|
|
|
$
|
450,000
|
|
|
$
|
724,687
|
|
|
$
|
15,386
|
|
|
$
|
721,384
|
|
|
$
|
36,300
|
|
|
$
|
26,714
|
|
|
$
|
82,500
|
|
|
|
610
|
|
|
$
|
942,889
|
|
|
$
|
4,100,470
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
$
|
724,687
|
|
|
$
|
15,386
|
|
|
$
|
721,384
|
|
|
$
|
5,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,466,532
|
|
Death(4)
|
|
|
|
|
|
|
|
|
|
$
|
724,687
|
|
|
$
|
15,386
|
|
|
$
|
721,384
|
|
|
$
|
5,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,466,532
|
|
Disability(4)
|
|
|
|
|
|
|
|
|
|
$
|
724,687
|
|
|
$
|
15,386
|
|
|
$
|
721,384
|
|
|
$
|
5,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,466,532
|
|
Termination With or Without Cause(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,075
|
|
|
|
|
(1) |
|
Executive is entitled to receive, as a result of the applicable
termination event, an amount equal to the value of his 2009
incentive bonus. |
|
(2) |
|
Except in the case of a change in control, assumes performance
criteria are ultimately met. |
|
(3) |
|
Assumes that the executive was terminated without cause or for
good reason at the time of the change in control. Assumes for
illustration only that the IRS considers the whole payment to be
a parachute payment subject to the 20% excise tax.
Any compensation not deemed to be a parachute
payment will reduce the amount of excise tax and
gross-up
payable. |
|
(4) |
|
Except as provided under Mr. DeCosmos employment
agreement described above, on termination of employment by death
or disability, executives receive no payment other than payment
of salary and benefits through the date of termination and
payment through life insurance or disability insurance purchased
by the executive and available to salaried employees generally.
Mr. DeCosmo would receive a cash lump-sum payment equal to
the sum of his annual base salary and a pro-rata portion of his
annual target bonus. Under our Stock Incentive Plan, all options
will immediately vest upon death or total disability and will
remain exercisable for 12 months (death) or 36 months
(disability). Restricted stock units and performance stock units
will vest immediately, but performance stock units will only be
paid if performance criteria are met. |
|
(5) |
|
Represents termination by us without cause of Mr. DeCosmo
or termination by Mr. DeCosmo for good reason.
Mr. DeCosmos employment agreement provides that he
will receive a severance payment in the event of termination
without cause or termination by him for good reason in addition
to all other benefits which would be received in the event of a
change in control. This assumes the termination event did not
occur in connection with or within two years following a change
of control. |
|
(6) |
|
Represents termination by us for cause of or termination with
good reason by any executive other than Mr. DeCosmo; or
termination without cause by any executive. We do not have a
plan or policy to provide severance benefits to executives whose
employment terminates with cause or without good reason.
Mr. DeCosmo is the only executive who has an employment
agreement with pre-established severance benefits, other than
the change in control agreements. In return for the
post-employment benefits, Mr. DeCosmo agreed not to compete
with our company for two years after his departure. |
42
TREATMENT
OF STOCK AWARDS OTHER THAN UPON CHANGE IN CONTROL
In 2009, other than Mr. DeCosmo, none of the named
executive officers had an employment contract or an agreement
providing for severance payments in the event of termination of
employment other than upon a change in control event. Under our
Stock Incentive Plan, an employee whose employment terminates
has three months to exercise any options that are exercisable.
All other options and all unvested restricted stock units and
unearned performance stock units are forfeited. The employee
retains any dividends earned prior to termination.
REPORT OF
THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis with management and, based
on this review and discussion, recommended to the Board of
Directors that it be included in our Annual Report on
Form 10-K
for the year ended December 31, 2009 and in this proxy
statement.
James A. Johnson, Chairman
Kathleen Brown
William G. Currie
James A. Rubright
Compensation
Committee Interlocks and Insider Participation
Mr. DeCosmo is our only executive officer who serves as a
member of our board of directors, but he does not serve on our
Compensation Committee. None of our executive officers serve as
a member of the compensation committee of any entity that has
one or more executive officers serving on our Compensation
Committee.
PROPOSAL TO
RE-APPROVE
MATERIAL TERMS OF 2007 STOCK INCENTIVE PLAN FOR
SECTION 162(M) PURPOSES
Section 162(m) of the Internal Revenue Code
(Section 162(m)) and related Treasury
Regulations generally disallow a tax deduction by public
companies for certain compensation in excess of $1 million
paid to the chief executive officer and the three other most
highly compensated executive officers (other than the CFO)
(covered officers) unless such compensation is based
on objective performance goals that are approved by the
stockholders and otherwise meets the requirements for
performance-based compensation under Section 162(m). Before
our spin-off, our sole stockholder approved our 2007 Stock
Incentive Plan (as amended, the Plan). Pursuant to a
Section 162(m) transition rule applicable to spin-offs,
performance-based compensation under the Plan qualified as
performance based compensation under Section 162(m).
However, this transition rule expired May 12, 2009. We
think it is in the best interests of us and our stockholders
that the $1 million deduction limit under
Section 162(m) not apply to performance-based compensation
paid under the Plan. To be compliant with Section 162(m),
we are asking you to re-approve the material terms of the Plan.
For compensation to qualify as performance-based under
Section 162(m), the material terms under which the
particular performance-based compensation is to be paid,
including (1) the performance goals, (2) the group of
participants whose compensation would be subject to the
performance goals, and (3) the maximum amount payable to an
executive officer, must be disclosed to, and approved by,
stockholders. Section 162(m) requires that the disclosure
to stockholders be specific enough so that stockholders can
determine the maximum amount of compensation that could be
payable to the employee under a performance goal during a
specified period.
Because the Section 162(m) transition period relating to
our spin-off from Temple-Inland expired on May 12, 2009,
stockholder approval of the material terms of the Plan is
necessary for Section 162(m) purposes or else we may lose
certain federal income tax deductions under Section 162(m).
We believe it is prudent and
43
in the best interests of us and our stockholders to qualify
performance-based awards under the Plan as performance-based
compensation under Section 162(m) (and therefore not
subject to the $1 million deduction limitation) should this
situation arise in future years.
We are not seeking stockholder approval of additional shares or
other Plan amendments. We are seeking approval of the material
terms of the Plan for Section 162(m) purposes only. The
Plan itself has been previously approved. Thus, regardless of
whether this proposal is approved, the Plan will continue to be
in effect, and we will continue to be authorized to grant
equity-based awards under the Plan. If this proposal is not
approved, the only effect will be to cause performance-based
compensation under the Plan not to be considered
performance-based for Section 162(m) purposes, which would
cause the $1 million deduction limit to apply to such
compensation. We believe not qualifying performance-based
compensation for Section 162(m) purposes would negatively
impact us and our stockholders.
The material terms are as follows:
Participants Eligible. Our directors, offices,
employees and consultants are eligible to receive awards under
the Plan. Performance-based awards may be granted to any of such
persons under the Plan. Although Section 162(m) only limits
the deductibility for compensation paid to our covered officers,
we have expanded the list of persons who would be eligible to
receive Section 162(m) qualified performance-based
compensation in the event that one or more of them should become
one of our covered officers in future years. Notwithstanding our
ability to grant performance-based compensation to this group of
eligible persons, nothing in this approval will obligate us to
grant awards that satisfy the Section 162(m)
performance-based compensation requirements to any of our
employees or officers.
Performance Goals. The performance goals for
awards intended to qualify as performance-based
compensation under Section 162(m) will be based on
measurable and attainable financial targets selected by our
Compensation Committee from the following list with respect to
the company: satisfactory internal or external audits,
achievement of balance sheet or income statement objectives,
cash flow, customer satisfaction metrics and achievement of
customer satisfaction goals, dividend payments, earnings
(including before or after taxes, interest, depreciation and
amortization), earnings growth, earnings per share, economic
value added, expenses, improvement of financial ratings,
internal rate of return, market share, net asset value, return
on assets, net income, net operating gross margin, net operating
profit after taxes (NOPAT), net sales growth, NOPAT
growth, operating income, operating margin, comparisons to the
performance of other companies, pro forma income, regulatory
compliance, return measures (including return on assets,
designated assets, capital, committed capital, net capital
employed, equity, sales, or stockholder equity, and return
versus our companys cost of capital), revenues, real
estate value creation, sales, stock price (including growth
measures and total stockholder return), comparison to stock
market indices, implementation or completion of one or more
projects or transactions, working capital, or any other
objective goals that the Compensation Committee of our Board of
Directors establishes. Performance goals may be absolute in
their terms or measured against or in relationship to other
companies. Performance goals may be particular to an award
recipient or the department, branch, affiliate, or division in
which the award recipient works, or may be based on the
performance of the company, on or more affiliates, or the
company and one or more affiliates, and may cover such period(s)
as the Compensation Committee may specify.
The performance goals will be established by our Compensation
Committee in accordance with Section 162(m) and the
applicable Treasury Regulations. At the end of the applicable
performance period, our Compensation Committee will certify the
attainment of the performance goals and may decrease, but not
increase, the number of shares or cash payable upon attainment
of such goals. To the extent our Compensation Committee does not
satisfy the requirements of Section 162(m),
performance-based compensation may be granted and administered
by a committee of directors that meet such requirements.
Maximum Individual Annual Compensation. Any
awards of stock options or stock appreciation rights will have
an exercise price not less than the fair market value of our
common stock as of the date of grant. No individual participant
may receive awards in any one calendar year covering more than
200,000 shares of our common stock, subject to adjustment
upon certain corporate events described in the Plan. The maximum
44
amount of cash payable to any employee pursuant to
performance-based awards to the employee under the Plan during a
calendar year cannot exceed $5 million.
Other
Material Features of the Plan
The following summary of the other material terms of the Plan is
qualified in its entirety by the full text of the Plan, which
has been previously filed electronically with the Securities and
Exchange Commission and can be reviewed on the Securities and
Exchange Commissions website at www.sec.gov. You
may also obtain, free of charge, a copy of the Plan by writing
to our Corporate Secretary at Forestar Group Inc. 6300 Bee Cave
Road, Building Two, Suite 500, Austin, Texas 78746.
Purpose. The purpose of the Plan is to attract
and retain employees, members of our Board and consultants by
providing them with additional incentives, and to promote the
success of our companys business.
Administration. Our Board or one or more
committees appointed by our Board will administer the Plan. For
this purpose our Board has delegated general administrative
authority for the Plan to our Compensation Committee. Our Board
may delegate some or all of its authority with respect to the
Plan to another committee of directors and may delegate certain
limited award grant authority to one or more officers of our
company. (The appropriate acting body, be it our Board of
Directors, a committee within its delegated authority, or an
officer within his or her delegated authority, is referred to in
this summary as the Administrator.) The
Administrator determines the number of shares that are subject
to awards and the terms and conditions of such awards, including
the price (if any) to be paid for the shares or the award. Along
with other authority granted to the Administrator under the
Plan, the Administrator may (i) determine fair market
value, (ii) select recipients of awards,
(iii) determine the number of shares subject to awards,
(iv) determine the terms and conditions of awards, and
(v) amend outstanding awards.
Eligibility. Persons eligible to receive
awards under the Plan include our officers, employees,
consultants and members of our Board. The Administrator
determines from time to time the participants to whom awards
will be granted.
Authorized Shares; Limits on Awards. The
maximum number of common shares that may be issued or
transferred pursuant to awards under the Plan equals 6,450,000,
all of which may be subject to incentive stock option treatment.
The total number of shares that may be issued for awards to any
single participant during a calendar year is 200,000, and for
cash awards is $5 million. In addition, shares that expire
or are forfeited or terminated without being exercised or that
are settled for cash are again available for grant of additional
awards under the Plan within the limits provided by the Plan.
Adjustments or Changes in Capitalization. In
the event of any change in the outstanding shares of common
stock by reason of a stock dividend, stock split, reverse stock
split, spin-off, recapitalization, reclassification, combination
or exchange of shares, merger, consolidation, liquidation or
similar corporate transaction, the Administrator shall provide
for a substitution for a adjustment in the (i) number and
class of securities subject to outstanding awards, (ii) the
consideration to be received upon exercise or vesting of an
award, (iii) the exercise price of options, (iv) the
aggregate number and class of securities for which awards may be
granted under the Plan,
and/or
(v) the maximum number of securities with respect to which
an employee may be granted awards during any calendar year.
Incentive Awards. The Plan authorizes stock
options, stock appreciation rights (SARs),
restricted stock, restricted stock units, performance-based
awards, as well as other stock-based awards (described in the
Plan) that are responsive to changing developments in management
compensation. The Plan retains the flexibility to offer
competitive incentives and to tailor benefits to specific needs
and circumstances. Any award may be paid or settled in cash. An
option or SAR will expire, or other award will vest in
accordance with the schedule set forth in the applicable award
agreement.
Stock Option. A stock option is the right to
purchase common shares at a future date at a specified price per
share generally equal to, but no less than, the fair market
value of a share on the date of grant. An option may either be
an Incentive Stock Option (ISO) or a nonqualified
stock option (NQSO). ISO benefits are
45
taxed differently from NQSOs, as described under Federal
Income Tax Treatment of Awards under the Plan, below. ISOs
also are subject to more restrictive terms and are limited in
amount by the Internal Revenue Code (the Code) and the Plan. The
exercise price for each option granted is determined in
accordance with the method as defined in the Plan, except that
the option exercise price may not be less than 100% of the fair
market value of a share of our common stock on the date of grant
(110% in the case of incentive options granted to an employee
who owns stock representing more than 10% of the voting power of
our capital stock). All options granted under the Plan will
expire no later than ten years from the date of grant (five
years in the case of incentive options to an employee who owns
stock representing more than 10% of the voting power of our
capital stock). The method of exercising an option granted under
the Plan will be set forth in the stock option agreement for
that particular option. Full payment for shares purchased on the
exercise of any option must be made at the time of such exercise
in a manner approved by the Administrator.
SARs. SARs permit the holder to receive the
appreciation in the value of our common stock directly from us
in cash or shares of our common stock. Our Compensation
Committee determines the number of covered shares, the exercise
price, the vesting schedule for SARs, and whether the SARs will
be settled in cash or stock. Upon exercise of vested SARs, the
holder will receive, as determined by the Administrator, either
(1) cash in an amount equal to the difference between the
fair market value of our common stock at the date of exercise
and the exercise price of the SAR, multiplied by the number of
shares with respect to which the SARs are exercised or
(2) a number of shares of our common stock equal to such
amount of cash divided by fair-market value of our common stock
on the date of exercise. The exercise price for each SAR granted
will not be less than the fair market value of a share of our
common stock on the date of grant.
Restricted Stock. A restricted stock award is
typically for a fixed number of common shares subject to
restrictions. The Administrator specifies the price, if any, the
participant must pay for such shares and the restrictions (which
may include, for example, continued service
and/or
performance standards) imposed on such shares. Except for these
restrictions and any others imposed by the Administrator, upon
the grant of Restricted Stock the recipient will have rights of
a stockholder with respect to the Restricted Stock, including
the right to vote the Restricted Stock and to receive all
dividends and other distributions paid or made with respect to
the Restricted Stock. A stock bonus may be granted by the
Administrator to any eligible person to reward exceptional or
special services, contributions or achievements in the manner
and on such terms and conditions (including any restrictions on
such shares) as determined from time to time by the
Administrator. The number of shares so awarded shall be
determined by the Administrator and may be granted independently
or in lieu of a cash bonus.
Restricted Stock Units. Restricted stock units
are not shares of our common stock and do not entitle the
recipients to the rights of a stockholder, but rather entitle
the holder upon their settlement to the value of one share of
our common stock. Restricted stock units granted under the Plan
may or may not be subject to performance conditions. Restricted
stock units will be settled in shares of our common stock or
cash in an amount based on the fair market value of our common
stock on the settlement date.
Performance Awards. The payment of the value
of a performance award is conditioned upon the achievement of
performance goals set by the Compensation Committee at the time
of granting the performance award and may be paid in cash,
shares of our common stock, or a combination thereof. The
maximum value of the cash that may be paid to a participant
pursuant to a performance award granted in any year is
$5 million. For a description of the performance goals, see
discussion under General
Performance Goals.
Other Stock-Based Awards. The Plan also
provides for grants of other stock-based awards with terms
determined by our Administrator.
Transfer Restrictions. Subject to certain
exceptions, awards under the Plan are not transferable by the
recipient other than by will or the laws of descent and
distribution and are generally exercisable, during the
recipients lifetime, only by him or her.
Termination of or Changes to the Plan. Our
Board may amend, alter or discontinue the Plan at any time. No
such amendment or termination, however, may impair the rights of
any holder of outstanding awards
46
without his or her consent, and no award may be amended or
otherwise subject to any action that would be treated, for
accounting purposes, as a repricing of such award.
Change in Control. Vesting of awards may be
accelerated in the event of certain change in control situations.
Federal
Income Tax Treatment of Awards under the Plan
Federal income tax consequences relating to awards under the
Plan are summarized in the following discussion. This summary is
not intended to be exhaustive and, among other considerations,
does not describe the deferred compensation provisions of
Section 409A of the U.S. Internal Revenue Code to the
extent an award is subject to and does not satisfy those rules,
nor does it describe state, local, or international tax
consequences.
For NQSOs, we are generally entitled to deduct (and the optionee
recognizes taxable income in) an amount equal to the difference
between the option exercise price and the fair market value of
the shares at the time of exercise. For ISOs, we are generally
not entitled to a deduction nor does the optionee recognize
income at the time of exercise. The current federal income tax
consequences of other awards authorized under the Plan generally
follow certain basic patterns: SARs are taxed and deductible in
substantially the same manner as NQSOs; nontransferable
restricted stock subject to a substantial risk of forfeiture
results in income recognition equal to the excess of the fair
market value over the price paid (if any) only at the time the
restrictions lapse (unless the recipient elects to accelerate
recognition as of the date of grant); bonuses and performance
share awards are generally subject to tax at the time of
payment; cash-based awards are generally subject to tax at the
time of payment; and compensation otherwise effectively deferred
is taxed when paid. We will generally have a corresponding
deduction at the time the participant recognizes income.
However, as for those awards subject to ISO treatment, we would
generally have no corresponding compensation deduction.
If an award is accelerated under the Plan in connection with a
change in control (as this term is used under the Code), we may
not be permitted to deduct the portion of the compensation
attributable to the acceleration (parachute
payments) if it exceeds certain threshold limits under the
Code (and certain related excise taxes may be triggered).
Furthermore, the aggregate compensation in excess of $1,000,000
attributable to awards which are not
performance-based within the meaning of
Section 162(m) of the Code may not be permitted to be
deducted by us in certain circumstances.
New Plan
Benefits
Awards are subject to the discretion of the Administrator.
Therefore, it is not possible to determine the benefits that
will be received in the future by participants in the Plan.
Vote
Required and Board of Directors Recommendation
The affirmative vote of a majority of the votes cast by the
stockholders entitled to vote and present in person or
represented by proxy at the annual meeting is required for
re-approval of the material terms of the Plan for
Section 162(m) purposes. Any shares not voted (whether by
abstention, broker non-vote or otherwise) will not be counted as
votes cast and will have no effect on the outcome of the vote.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE
PROPOSAL TO
RE-APPROVE
THE MATERIAL TERMS OF THE 2007 STOCK INCENTIVE PLAN FOR
SECTION 162(m) PURPOSES.
47
AUDIT
MATTERS
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee assists the Board of Directors in its
oversight of the integrity of the financial statements;
compliance with legal and regulatory requirements; the adequacy
of internal control over financial reporting; and the
independence, qualifications, and performance of the independent
registered public accounting firm and the internal auditors. Our
duties and responsibilities are more fully described in our
charter, which is available on our web site
www.forestargroup.com.
Management is responsible for the financial statements, the
effectiveness of internal control over financial reporting, and
compliance with legal and regulatory requirements. The
independent registered public accounting firm, Ernst &
Young LLP, is responsible for auditing the financial statements
and expressing its opinion on the conformity of the financial
statements with generally accepted accounting principles.
In fulfilling our oversight responsibilities, we reviewed and
discussed with management and with Ernst & Young LLP
the audited financial statements for the year ended
December 31, 2009. We also reviewed and discussed the audit
plans and results and the matters required to be discussed with
Ernst & Young LLP by Statement of Auditing Standards
No. 61, Communications with Audit Committees, as
amended. In addition, we received and reviewed the written
disclosures and letter from Ernst & Young LLP required
by applicable rules of the Public Company Accounting Oversight
Board regarding the independent accountants communications
with the Audit Committee concerning independence, and have
discussed with Ernst & Young LLP their independence.
Based on this, we recommended to the Board of Directors that the
audited financial statements be included in the Annual Report on
Form 10-K
for the year ended December 31, 2009, for filing with the
Securities and Exchange Commission.
Audit Committee:
James A. Rubright, Chairman
Kathleen Brown
Thomas H. McAuley
William C. Powers, Jr.
PROPOSAL TO
RATIFY THE SELECTION OF ERNST & YOUNG LLP
AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Ernst & Young LLP as
the independent registered public accounting firm to audit our
consolidated financial statements for 2010. Ernst &
Young LLP currently serves as our independent registered public
accounting firm.
Fees paid to Ernst & Young LLP for the last two years
were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Audit Fees(1)
|
|
$
|
510
|
|
|
$
|
490
|
|
Audit-Related Fees(2)
|
|
|
54
|
|
|
|
6
|
|
Tax Fees(3)
|
|
|
17
|
|
|
|
|
|
All Other Fees
|
|
|
0
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
581
|
|
|
$
|
497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit fees include the annual audit and quarterly reviews of our
financial statements, consultation on new accounting standards
and current transactions, and normal assistance with annual and
periodic filings of our financial statements with the Securities
and Exchange Commission. |
|
(2) |
|
Audit-related fees include consultation on the application of
proposed accounting standards, and consultation on accounting
for proposed transactions. |
48
|
|
|
(3) |
|
Tax fees include assistance in the preparation of our federal,
state, and local income and franchise tax returns and in the
periodic examinations thereof by regulatory authorities and
consultation on the tax treatment for transactions. |
All services provided by the independent registered public
accounting firm must be pre-approved by the Audit Committee.
Under the pre-approval policy, the Audit Committee pre-approves
by type and amount the services expected to be provided by the
independent registered public accounting firm during the coming
year. This pre-approval is done annually and is documented as an
exhibit to the minutes of the Audit Committee meeting. The types
of services the Audit Committee pre-approves annually are the
audit, audit-related, and certain tax services described above.
A pre-approval subcommittee consisting of the Chairman of the
Audit Committee and one other member of the Audit Committee may
grant approvals between Audit Committee meetings for services
not approved as part of the annual approval process. Such
approvals must be reported to the full Audit Committee at its
next meeting. Pre-approval is not required for non-audit
services that were not recognized as non-audit services at the
time of engagement, if the aggregate amount of such services
does not exceed the lesser of $100,000 or 5% of the total amount
of revenues paid to the independent registered public accounting
firm during that fiscal year and such services are promptly
brought to the attention of and approved by the Audit Committee
prior to completion of the current years audit. During
2009, no services were approved pursuant to this exception.
In addition, the Audit Committee must separately pre-approve any
significant changes in scope or fees for any approved service.
No pre-approval authority is delegated to management. Quarterly,
the committee reviews the specific services that have been
provided and the related fees.
Representatives of Ernst & Young LLP will be present
at the annual meeting with the opportunity to make a statement
if they desire to do so and will be available to respond to
appropriate questions from stockholders.
Stockholder ratification is not required for the selection of
Ernst & Young LLP, because the Audit Committee has the
responsibility for selecting our independent registered public
accounting firm. The selection, however, is being submitted for
ratification by the stockholders at the annual meeting. No
determination has been made as to what action the Audit
Committee would take if stockholders do not ratify the selection.
The affirmative vote of a majority of the votes cast by
stockholders entitled to vote at the annual meeting is required
for the ratification of the Audit Committees appointment
of Ernst & Young LLP as independent registered public
accounting firm for 2010. Any share not voted (whether by
abstention or otherwise) will not be counted as votes cast and
will have no effect on the outcome of the vote.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION
OF ERNST & YOUNG LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER
31, 2010.
49
OTHER
MATTERS
Other
Business to be Presented
Our Board of Directors knows of no other business that may
properly be, or that is likely to be, brought before the annual
meeting. If, however, any other business should properly be
presented for consideration at the annual meeting, including,
among other things, consideration of a motion to adjourn the
meeting to another time or place, the persons named in the
accompanying proxy will vote the proxy as in their discretion
they may deem appropriate.
DATE FOR
RECEIPT OF STOCKHOLDER PROPOSALS
Pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934, as amended,
stockholders may present appropriate proposals for inclusion in
our proxy statement and for consideration at our annual meeting
of stockholders by submitting their proposals to us in a timely
manner. For a stockholder proposal to be considered for
inclusion in our proxy statement for our 2011 annual meeting,
the proposal must be received by our Corporate Secretary by
December 1, 2010 and must comply with the requirements of
Rule 14a-8.
Any stockholder proposal received after December 1, 2010
will not be considered for inclusion in our 2011 proxy statement.
Our Bylaws contain an advance notice procedure with regard to
items of business to be brought before an annual meeting of
stockholders by a stockholder. These procedures require that
notice be made in writing to our Corporate Secretary. The notice
must be received at our executive offices not less than
75 days nor more than 100 days prior to the
anniversary date of the immediately preceding annual meeting of
stockholders. In the case of an annual meeting called for a date
more than 50 days prior to the anniversary date, notice
must be received not later than the close of business on the
10th day following the date on which notice of the annual
meeting is first mailed to stockholders or made public,
whichever occurs first. Stockholder proposals to be brought
before our 2011 annual meeting and submitted outside the
processes of
Rule 14a-8
will be considered untimely if they are submitted before
January 31, 2011 or after February 25, 2011. Our
Bylaws require that the notice of the proposal contain certain
information concerning the proposing stockholder and the
proposal.
Our Bylaws also contain an advance notice procedure for the
nomination of candidates for election to the Board of Directors
by stockholders. For a brief description of the nomination
procedures, see How Nominees Are Selected . Director
nominations to be brought by stockholders before our 2011 annual
meeting will be considered untimely if they are submitted before
January 31, 2011 or after February 25, 2011.
Voting
Questions or Assistance
If you have any questions or require assistance with the voting
process, please contact:
D. F. King & Co., Inc.
48 Wall Street
New York, New York 10005
(800) 714-3312
This Proxy Statement is being sent to you by the Forestar Board
of Directors.
David M. Grimm
Secretary
Austin, Texas
March 31, 2010
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a
week!
Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy.
VALIDATION
DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by
1:00 a.m., Central Time, on May 11, 2010. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vote by
Internet · Log
on to the Internet and go
to www.investorvote.com/for ·
Follow the steps outlined on the secured website. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vote by
telephone · Call toll free 1-800-652-VOTE (8683) within the
USA,
US territories & Canada any time on a touch tone
telephone. There is NO CHARGE to you for the call. |
|
|
|
|
|
|
|
|
|
|
Using a black ink pen, mark
your votes with an X as shown in
this example. Please do not write outside the designated areas. |
x |
|
|
|
|
|
|
· Follow the instructions provided by the
recorded message. |
|
|
|
|
Annual Meeting Proxy Card |
|
|
▼
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN
THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
▼
|
|
A
Proposals The Directors of Forestar Group Inc. recommend voting FOR proposals 1, 2, and 3.
|
|
|
|
|
1. To elect four (4) directors to the Board of Directors. These four directors will serve as
directors until their terms expire or, if later, until replacement directors are elected who meet
all necessary qualifications.
|
+ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For |
|
Withhold |
|
|
|
For |
|
Withhold |
|
|
|
For |
Withhold |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01 - Kenneth M. Jastrow, II |
|
o |
|
o |
|
02 - James M. DeCosmo |
|
o |
|
o |
|
03 - James A. Johnson |
|
o |
o |
|
|
|
04 - Richard M. Smith |
|
o |
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For |
|
Against |
|
Abstain |
|
|
|
|
|
For |
|
Against |
|
Abstain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. |
|
To re-approve the material terms of
our 2007 Stock Incentive Plan for
purposes of complying with the
requirements of Section 162(m) of the
Internal Revenue Code.
|
|
o |
|
o |
|
o |
|
3. |
|
To ratify the Audit Committees
appointment of Ernst & Young LLP as
independent registered public accounting
firm for the year 2010.
|
|
o |
|
o |
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B
Non-Voting
Items |
|
|
Change of Address
Please print new address below. |
|
Comments
Please print your comments below. |
|
|
|
C |
Authorized
Signatures
This section must be completed for your vote to be counted.
Date and Sign Below
|
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give
full title.
|
|
|
|
|
Date (mm/dd/yyyy) Please print
date below. |
|
Signature 1 Please keep signature within the box. |
|
Signature 2 Please keep signature within the box. |
/ / |
|
|
|
|
▼
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN
THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
▼
Proxy Forestar Group Inc.
This Proxy is Solicited on Behalf of the Board of Directors
for the Annual Meeting on May 11, 2010
The undersigned hereby acknowledges receipt of the notice of the Annual Meeting of
Stockholders and proxy statement each dated March 31, 2010 and does hereby appoint James M.
DeCosmo, Christopher L. Nines and Charles D. Jehl and each of them as Proxies, each with the power
to appoint his substitute, and hereby authorizes each of them to represent and vote, as designated
below, all the shares of Common Stock, par value $1.00 per share, of Forestar Group Inc. held of
record by the undersigned at the close of business on March 15, 2010 at the Annual Meeting of
Stockholders to be held on Tuesday, May 11, 2010, and any adjournment(s) or postponement(s)
thereof.
YOUR VOTE IS IMPORTANT
Regardless of whether you plan to attend the Annual Meeting of Stockholders, you can be sure your
shares are represented at the meeting by promptly returning your proxy in the enclosed envelope.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items to be voted on appear on reverse side.)