UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No.     )

Filed by the Registrant

Filed by a Party other than the Registrant

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KB HOME

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Dear Fellow Stockholder:

Notice

of 2024 Annual Meeting
of Stockholders

Thursday, April 18, 2024

9:00 a.m., Pacific Time

Webcast Meeting Location:
meetnow.global/M9X547D

2024 Annual Meeting Summary

Your Board is furnishing this Proxy Statement and a proxy/voting instruction form or Notice of Internet Availability to solicit your proxy for KB Home’s 2024 Annual Meeting of Stockholders (“Annual Meeting”). We anticipate these proxy materials will be made available to stockholders on or about March 8, 2024 and filed with the Securities and Exchange Commission (“SEC”) on the same date. Below is summary information about the Annual Meeting. Please review all the information in this Proxy Statement before voting. 

Annual Meeting Information 

Date & Time	Location:
Thursday, April 18, 2024 9:00 a.m., Pacific Time	Audio-only Webcast Meeting at meetnow.global/M9X547D

Meeting Agenda

Items of Business		Board Recommendation			Voting Standard
Election of Directors			FOR each of the nine nominees		Majority of Votes Cast
Advisory vote to approve named executive officer (“NEO”) compensation, also known as “Say-on-Pay”			FOR		Majority of Shares Present and Entitled to Vote
Ratify Ernst & Young LLP’s appointment as KB Home’s independent registered public accounting firm (“Independent Auditor”) for the fiscal year ending November 30, 2024			FOR		Majority of Shares Present and Entitled to Vote

Participating in the Annual Meeting Webcast 

The Annual Meeting webcast at meetnow.global/M9X547D will open at approximately 8:45 a.m., Pacific Time, on April 18, 2024. To access the audio-only meeting, vote and ask questions, you will need a valid control number from our transfer agent, Computershare. Holders of record will receive their control number on the notice or proxy card Computershare distributes to them. 

Questions may be submitted before or during the Annual Meeting. To submit a question in advance, visit meetnow.global/M9X547D before 8:59 p.m., Pacific Time, on April 17, 2024, and enter a valid control number. We will endeavor to answer as many stockholder questions as time permits. However, we may not respond to questions that are not pertinent to Annual Meeting matters or our business. Single responses to a group of substantially similar questions may be provided to avoid repetition. We ask attendees to help us keep the proceedings orderly by following the meeting rules of conduct.

If you are a beneficial holder, meaning an intermediate broker or financial institution holds your shares, you must register with Computershare no later than 5:00 p.m., Eastern Time, on April 15, 2024, to be able to vote and ask questions at the Annual Meeting. To register, please provide Computershare with proof of your KB Home stockholdings, known as a legal proxy, obtained from your broker or financial institution, along with your name and email address. Send the items by email to legalproxy@computershare.com (use KB Home Legal Proxy in the subject line); or by mail to: Computershare, KB Home Legal Proxy, P.O. Box 43001; Providence, RI 02940-3001. Computershare will email you confirmation of your registration.

Beneficial holders who cannot obtain a legal proxy can attend the Annual Meeting as a guest at the above-noted Internet address, but they will not be able to vote or ask questions.

 

Our Values
	We make relationships the foundation for all we do.   It takes strong relationships to build a home. To build a strong relationship it takes respect, integrity, and open and honest communication. Our employees are the heart and soul of KB, and that belief in relationships defines how we behave toward each other, how we treat our customers through every step of the process, and, how we work with our suppliers, trade, and municipality partners.
	We build homes that make lives better.   Innovative design and quality construction standards are the cornerstones of our brand. Behind our continuous drive to build exceptional homes is a passion for the wellbeing of those who live in them. From architecture to construction to customer service, we care about making our buyers’ lives more comfortable, convenient, and healthy. That’s how we lead the industry in customer satisfaction, and strive to keep it that way.
	We believe that everyone deserves a home that’s as unique as they are.   Our business model is built on a simple, yet radical idea: a house becomes your home when it’s an expression of who you are. That’s why we give our customers the ability to choose — from homesite to elevation, from floor plan to design options — and a buying experience that’s personalized from end-to-end.
	We deliver more for less.   We believe that every customer deserves a home that lives up to their dreams. That’s why it’s our shared responsibility to ensure that what we build delivers great value, so that every customer gets a home — and a homebuying experience — that can exceed their expectations without exceeding their budget. It’s a disciplined and responsible approach to homebuilding that’s good for our homebuyers and our business.
	We strive for a better shared future.   From individuals, to families, to whole communities, our collective actions can have a beneficial impact on the world. We believe that every decision we make, from how we manage our workplace, to how we run our operations, has the potential to advance environmental, social, and economic sustainability.

Corporate Governance and Board Matters

The Board has established an appropriate governance framework to oversee the management of our business, as summarized below.⁽¹⁾

Independence	■ All directors, except for our Chief Executive Officer (“CEO”), are independent.  ■ The Lead Independent Director position has significant responsibilities and authority, as described below. ■ Only independent directors serve on Board committees. ■ During 2023, there were no Related Party Transactions (as described in Annex 1).
Accountability	■ All directors are elected on an annual basis under a majority voting standard. ■ We have one class of voting securities allowing each holder one vote for each share held, and no supermajority voting requirements (except per Delaware law, our state of incorporation). ■ We proactively engage with our stockholders year-round on our business strategy, performance and outlook. ■ Directors and senior executives are subject to significant stock ownership requirements, and they and all employees may not pledge or hedge holdings of our securities. ■ Executive officers are subject to an incentive-based compensation recovery policy, and all unvested employee equity awards require double-trigger vesting in a change in control.
2023 Meetings and Attendance	■ The Board held five meetings and also acted by unanimous written consent. ■ The Audit and Compliance Committee held six meetings. ■ The Management Development and Compensation Committee held six meetings. ■ The Nominating and Corporate Governance Committee held five meetings. ■ Each incumbent director standing for election attended at least 75% of his or her total Board and committee meetings. ■ We expect directors to attend our annual stockholder meetings. All directors attended our 2023 annual meeting.
Effectiveness Standards	■ No more than one director may be an employee. ■ Non-employee directors hold an executive session without management at each regularly scheduled Board meeting. ■ Directors must retire as of the first Annual Meeting following their 75th birthday.  Our directors’ average age is 61. ■ Directors may not serve on more than five other public company boards or, if they are a public company chief executive officer, on more than two other public company boards.  No directors are over-boarded.  ■ The Board and each of its standing committees conduct an annual self-evaluation of its performance.

Board and Committee Governance Structure

Board Leadership 

Jeffrey T. Mezger, our CEO, has served as Chairman of the Board since 2016. The non-employee directors have elected Mr. Mezger as Chairman based on their belief that with his fundamental understanding of our business model and effective operational leadership, combining the Chairman and CEO roles enhances our ability to achieve our long-term strategic and operational objectives more so than separating the roles. Board governance is balanced with a strong Lead Independent Director position, which is designed to maintain the Board’s independent oversight. Melissa Lora has served as Lead Independent Director since 2016 and will continue to do so through her current term.

Our Board’s Risk Oversight Role

Our Board is elected by our stockholders to oversee the management of our business and affairs and assure stockholders’ long-term interests are being served. Among other specified activities, the Board as a whole, or through its standing committees, reviews assessments of and senior management’s plans with respect to significant risks we face.  As described under “Commitment to Sustainability,” the Board oversees our sustainability program as part of our overall business strategy.

Risk Management Structure and Processes.  The Board has delegated oversight of certain risks to its standing committees, as described below. The committee chairs report to the Board about such delegated risks and other matters at each Board meeting. The Board itself monitors significant enterprise-wide operational and financial risks to our business, and management’s strategies to address or mitigate them, through briefings our CEO, Chief Financial Officer (“CFO”) and President and Chief Operating Officer (“COO”) provide at each Board meeting and between meetings, as appropriate. The Board also receives regulatory and legal briefings from our general counsel. 

Financial and Operational Risk Areas. The Board reviews and approves our shelf registration statements and debt and equity offerings thereunder, in some cases delegating the pricing of such transactions to a standing or ad hoc committee of independent directors, as well as our unsecured revolving credit facility and term loan agreements, and our share repurchase programs. The Board also approves land acquisitions if the purchase price or the purchase price plus expected land development exceed certain thresholds. Though no such land acquisition reviews occurred in 2023, in such cases, the proposed project, as with all our communities, will have previously been assessed through our standard local, regional and corporate review processes. 

Cybersecurity Risk Review. The Board through its Audit and Compliance Committee monitors cybersecurity risks and our evolving physical, electronic and other protection strategies and initiatives. This includes engaging in periodic reviews with management covering our cybersecurity tools and resources, threat environment, incident reporting procedures and future plans. Our chief information officer conducts this review with the committee, most recently in January 2024. Our chief information officer is supported by a chief information security officer and other employees and dedicated contract personnel experienced with information technology and cybersecurity matters who are responsible for evaluating and deploying the cybersecurity measures we employ, as described in the Annual Report.

Standing Board Committee Profiles 

Principal Responsibilities:

Oversees our corporate accounting and reporting practices and audit process, including our Independent Auditor’s qualifications, independence, retention, compensation and performance, and our compliance with legal and regulatory requirements; and may approve our incurring, guaranteeing or redeeming debt.  Four Audit Committee members, including the chair, are “audit committee financial experts” under SEC rules.

Delegated Risk Oversight:

Principal Responsibilities:

Evaluates and recommends our CEO’s compensation; determines compensation for the CEO’s direct reports; evaluates and recommends non-employee director compensation; and oversees our policies and programs relating to significant human resource matters, including leadership development and continuity, non-discrimination and equal employment opportunity policies, and initiatives designed to foster the diversity and inclusion of talents, backgrounds and perspectives within, and to support the health and safety of, our workforce. Frederic W. Cook & Co., Inc. (“FWC”) assists the committee with executive and non-employee director compensation as its outside compensation consultant.

Delegated Risk Oversight:

Principal Responsibilities:

Oversees our corporate governance policies and practices; and as further discussed in Annex 1, reviews “related party transactions;” identifies, evaluates and recommends qualified director candidates to the Board; and administers the annual Board evaluation process.

Delegated Risk Oversight:

Board Committee Membership Changes

Board Committee memberships changed on April 20, 2023, as follows: 

There were no other changes to the Board Committees’ composition in 2023.

Board Experience and Skills

We have a balanced and diverse Board whose members bring key skills and expertise, including those summarized below, for overseeing management’s execution of our strategic and operational objectives. Our directors are also financially literate and highly engaged, with strong leadership backgrounds, and academic, professional and personal experiences, which make them well-qualified to serve. The data below reflect the directors serving as of the date of this Proxy Statement.

			Corporate Governance: Experience with public or large private company governance.
			Enterprise Leadership: Experience as a chief executive or top manager for a commercial or academic organization, including responsibility for implementing business plans and managing results.
			Environmental: Experience or expertise with managing or advising on operational environmental matters, or possesses a relevant academic/research background.
			Finance/Investing: Professional or academic expertise or experience in preparing, auditing or evaluating financial statements, or in managing commercial investments.
			Government: Experience serving as a public official or in another public position, or working with or advising on regulatory, legislative or policy matters.
			Homebuilding: Experience or expertise in residential land development or home construction activities.
			Human Capital Management: Experience in talent management, professional development and/or succession planning.
			Real Estate: Professional experience in acquiring, managing or selling real estate assets.
			Retailing: Experience operating or managing retail businesses or operations similar to our design studios.
			Strategic Risk Management: Experience identifying, assessing and managing critical risks to enterprise  wide or business unit strategic plans and achieving strategic objectives.
			Technological Innovation: Experience with or management of technology applications, advanced products or organizations that develop them. One director has cybersecurity management experience.

Director Compensation

The Compensation Committee periodically evaluates, with FWC’s assistance, and makes recommendations to the Board regarding compensation and benefits for non-employee directors, with attention to maintaining competitive positioning relative to peer public homebuilders and similarly situated companies. Non-employee director compensation was last adjusted in July 2019. Directors, other than Mr. Mezger, who is not paid for his Board service, are compensated as described below. We also pay directors’ travel-related expenses for Board meetings and Board activities. Our director compensation program is shown in the table below. Directors elected to the Board other than at an annual meeting receive prorated compensation.

Non-Employee Director Compensation

Retainers 

Each director may elect to receive retainers in equal quarterly cash installments, in unrestricted shares of our common stock or in deferred common stock awards (“stock units”). Equity-based grants are made as described below. 

Equity Grants 

Except as noted below, each director may elect to receive their equity grant in common stock or stock units. Grants are made on election to the Board, with the rounded number of shares/units based on our common stock’s grant date closing price. Directors receive a share of our common stock for each stock unit they hold on the earlier of a change in control or leaving the Board. Directors receive cash dividends on their common stock holdings and cash dividend equivalent payments on their stock units. Stock units have no voting rights. If a director has not satisfied their stock ownership requirement (see under “Stock Ownership Requirements”), they can receive only stock units for their equity grant and must hold all shares of common stock until they satisfy the requirement or leave the Board.

Meeting Fees 

Directors receive fees for each non-regularly scheduled Board or committee meeting they attend if they have also attended all the same body’s prior meetings during the applicable Director Year, which is the period between our annual meetings.  

Indemnification Agreements 

We have agreements with our directors, which were updated in January 2024, that provide them with indemnification and advancement of expenses to supplement what our Certificate of Incorporation and insurance policies provide, subject to certain limitations.

Directors’ Legacy Program 

From 1995 to 2007, we maintained a Directors’ Legacy Program. Ms. Lora is the only current director who is a participant. Under the program, after a participant’s death, we will make a donation on their behalf of up to $1.0 million directly to up to five participant-designated qualifying charitable institutions or organizations in 10 equal annual installments. Program participants are fully vested in their donation amount; however, neither they nor their families receive any proceeds, compensation or tax savings associated with the program. We maintain life insurance policies to help fund program donations. In 2023, no premium payments were required to be made on policies associated with current directors. The total amount payable under the program at November 30, 2023 was $13.9 million.

Director Compensation During Fiscal Year 2023

The aggregate number of outstanding equity awards held by our non-employee directors at the end of our 2023 fiscal year are shown under “Ownership of KB Home Securities,” exclusive of 2,043 shares of our common stock Ms. Lora holds in a family trust.

Election of Directors

The Board will present as nominees at the Annual Meeting, and recommends our stockholders elect to the Board, each of the individuals named below for a one-year term ending at the election of directors at our 2025 annual meeting. Each nominee is standing for re-election and has consented to being nominated and agreed to serve as a director if elected.  After 20 years of service, Ms. Lora has decided not to stand for election at the Annual Meeting and will step down from the Board when her term ends as of the election of directors at the Annual Meeting. Mr. Niccol, who joined the Board in 2021, has also decided not to stand for election at the Annual Meeting and will step down from the Board when his term ends as of the election of directors at the Annual Meeting.

Should any of the nominees become unable to serve as a director prior to the Annual Meeting, the named proxies, unless otherwise directed, may vote for the election of another person as the Board may recommend. If the Board’s nominees below are elected at the Annual Meeting, the Board will have nine directors.

Voting Standard

To be elected, each nominee must receive a majority of votes cast in favor (i.e., the votes cast for a nominee’s election must exceed the votes cast against their election).

FOR	Board recommendation: FOR approval of each director nominee

Majority Voting Standard

Our Corporate Governance Principles provide that a director nominee who fails to win election to the Board in an uncontested election is expected to tender his or her resignation from the Board (or to have previously submitted a conditional tender). An “uncontested election” is one in which there is no director nominee that has been nominated by a stockholder in accordance with our By-Laws. This election is an uncontested election. If an incumbent director fails to receive the required vote for election in an uncontested election, the Nominating Committee will act promptly to determine whether to accept the director’s resignation and will submit its recommendation for the Board’s consideration. The Board expects the director whose resignation is under consideration to abstain from participating in any decision on that resignation. The Nominating Committee and the Board may consider any relevant factors in deciding whether to accept a director’s resignation.

Age: 63 Director Service Since: 2020   Founder and Chairman, theGROUP		Arthur R. Collins
		Arthur R. Collins is the founder and Managing Partner of theGROUP, a strategy, policy and communications firm. Prior to founding theGROUP in 2011, Mr. Collins was Chairman and CEO of Public Private Partnership, Inc., which he established in 1989. Mr. Collins has deep experience advising corporate, governmental, nonprofit and political organizations across a broad range of matters, including national security, energy, healthcare, agriculture, information technology, transportation, manufacturing and financial services. He also has a substantial presence in Washington, D.C. and the Southeast United States, where we have significant business operations.   Public Company Directorships: n KB Home n Aflac Incorporated n RLJ Lodging Trust Other Professional Experience: n Member, Ford’s Theatre Board of Trustees (2022 – Present) n Chairman, Morehouse School of Medicine Board of Trustees (2008 – Present) n Vice Chair, Brookings Institution Board of Trustees (2014 – 2023) n Member, Meridian International Center Board of Trustees (2011 – 2017) n Chairman, Florida A&M University Board of Trustees (2001 – 2003)

Age: 70 Director Service Since: 2016   Director, Richard S. Ziman Center for Real Estate at UCLA   Distinguished Professor of Finance and Arden Realty Chair, UCLA Anderson School of Management		Dr. Stuart A. Gabriel
		Dr. Gabriel has been since 2007 the Director of the Richard S. Ziman Center for Real Estate at UCLA, and is Distinguished Professor of Finance and Arden Realty Chair at the UCLA Anderson School of Management. With Dr. Gabriel’s significant professional experience in and distinguished study of macroeconomics and real estate, mortgage and finance markets, he has considerable knowledge and insight with respect to the economic, regulatory and financial drivers that affect housing and homebuilding at local, regional and national levels. In addition, with more than two decades of service in leadership roles at two of the most preeminent academic institutions in the country — UCLA and USC — he has substantial management and administrative expertise and is highly respected for his perspective on housing and land use matters in California, an important market for us, and nationally.   Public Company Directorships: n KB Home n KBS Real Estate Investment Trust III, Inc. n KBS Real Estate Investment Trust II, Inc. (2007 – 2023) n KBS Real Estate Investment Trust, Inc. (2005 – 2018) Other Professional Experience: n Director and Lusk Chair, USC Lusk Center for Real Estate (1997 – 2007) n Associate Professor/Professor, Finance and Business Economics, USC Marshall School of Business (1990 – 1997) n Economics Staff Member, Federal Reserve Board (1986 – 1990)

Ownership of KB Home Securities

The table below shows the amount and nature of our non-employee directors’ and NEOs’ respective beneficial ownership of our common stock as of February 26, 2024. Except as otherwise indicated below, the beneficial ownership is direct and each owner has sole voting and investment power with respect to the reported securities holdings.

The following table shows the ownership of each stockholder known to us to beneficially own more than five percent of our common stock. Except for the Grantor Stock Ownership Trust (“GSOT”), the below information (including footnotes) is based solely on the stockholders’ respective filings with the SEC reporting such ownership as of December 29, 2023, December 31, 2023 and January 31, 2024, as applicable. Some percentage figures below have been rounded.

Stock Ownership Requirements 

Our non-employee directors and senior executives are subject to stock ownership requirements to better align their interests with those of our stockholders. Our Corporate Governance Principles require each of our non-employee directors to own at least five times the Board retainer (which currently equates to $500,000) in value of our common stock or common stock equivalents by the fifth anniversary of joining the Board. The executive stock ownership policy requires applicable senior executives, including our NEOs, to own a certain number of shares within a specified period. The policy is discussed under “Equity Stock Ownership Policy.” Each of our non-employee directors and NEOs is in compliance with their respective policy requirements.

Delinquent Section 16(a) Reports

Under Section 16 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), our directors, executive officers and any persons holding more than 10% of our common stock are required to report to the SEC initial ownership of our common stock and any subsequent changes in ownership. The SEC has established specific filing due dates, and we are required to disclose any failure to file required ownership reports by these dates. Based solely on a review of forms filed with the SEC and the written representations of such persons, we are aware of no late Section 16(a) filings other than Ms. Dominguez not reporting a March 1, 2022 stock sale until a Form 5 filing made on December 22, 2023, and a Form 4 filing made on November 2, 2023 to report Mr. McGibney’s October 25, 2023 disposition of common stock to us solely to cover tax withholding obligations arising from the vesting of a previous grant of restricted shares.

Compensation Discussion and Analysis

Financial Performance and Compensation Highlights 

In 2023, as discussed in the Annual Report, we generated solid financial results, as we remained focused on balancing pace, price and production levels at every community to optimize our return on each inventory asset within its local market context amid a mixed operating environment over the course of the year. 

We began the year navigating weak housing market conditions, stemming from higher mortgage interest rates, persistent inflationary pressures and an uncertain economic outlook, which significantly depressed housing demand during the 2022 second half and into the 2023 first quarter. Reflecting the difficult operating context, and our business’ considerable cyclicality, in the 2022 fourth quarter, when the measures and goals for the long-term incentive awards tied to 2023-2025 performance were established and planning began for the 2023 annual incentive program, our gross orders and net orders were down 47% and 80%, respectively, compared to the prior year. Moreover, through the first five weeks of fiscal 2023, just prior to the Compensation Committee’s approving the 2023 annual incentive program goals, our net orders were 72% lower than the corresponding year-earlier period. We also forecasted, relative to corresponding 2022 periods, that our 2023 first quarter net orders would be down between 50% and 60%, our 2023 fiscal year revenues would be approximately 20% lower and our profit margins would be compressed.  

Demand began to improve in the 2023 second quarter and remained relatively healthy for the balance of the year due to, among other things, constrained resale home inventory, favorable demographic trends, buyer interest in homes at our price points and our selective implementation of targeted sales strategies to help drive order activity and minimize cancellations. In addition, a significant factor in our success in 2023 was a meaningful improvement in our average construction cycle time, resulting in higher-than-expected home deliveries and revenues. 

Altogether, in 2023, we delivered more than 13,200 homes (compared to an initial projection of roughly 11,400 homes), driving revenues of $6.4 billion, and diluted earnings of $7.03 per share. Our top-line, together with an operating margin above 11%, and the repurchase of shares during the year equal to 11% of our shares outstanding at the beginning of 2023, contributed to a 15% growth in our book value per share to $50.22.  In addition to our outperformance across several metrics for the year relative to our initial expectations, we continued to build our brand in 2023.  We also further advanced our industry leadership in sustainability, earning recognition from several organizations for our accomplishments and contributions, including in the broader communities in which we operate. 

Notable 2023 Annual Results and Long-Term Growth and Returns 

We produced a one-year total stockholder return of approximately 68%, at the 64th percentile of our peer group, and strong results across several key measures during 2023.  In addition, the following are five-year (2018-2023) result comparisons, except as noted:

We achieved strong homebuilding revenues, net income, and diluted earnings per share results between 2019 and 2023 as shown in the charts below.

Recent Recognition 

We have been recognized by the following organizations, among others, for our sustainability and human capital initiatives and practices:

Pay For Performance — 2023 Fiscal Year CEO Compensation 

The table below compares our CEO’s total compensation for 2023 and 2022 and reflects the more than $627,000 reduction in his annual incentive compensation payout and a market-based increase to his long-term incentive grant, which was comprised entirely of PSUs that will not fully vest until after our 2026 fiscal year concludes.

Engaging With Our Stockholders

Direct engagement with our stockholders is an integral part of managing our business to drive long-term value and aligns with our core value of building strong and collaborative relationships.

Why We Engage 

To Interact: We seek to understand the issues that are important to our stockholders through an ongoing, two-way dialogue in which we can respectfully discuss their priorities.

To Inform: We are committed to providing transparency into our strategy, performance, outlook and sustainability-related practices.

To Improve: We use feedback from stockholders to enhance our public disclosures and consider it in our decision-making.

How We Engage 

We conduct extensive stockholder outreach throughout the year, typically engaging with the investment management teams of our largest stockholders, as well as their governance representatives. Our stockholder conversations involve our senior management, investor relations, human resources and legal executives. Matters raised in these engagements are actively discussed with directors as relevant.

In 2023, we continued our longstanding practice of reaching out to our stockholders, including each of our 25 largest stockholders, in advance of our annual meeting and engaged with holders representing over 50% of our outstanding shares through written communications, phone calls and virtual meetings. We conducted additional proactive outreach with some of our largest stockholders throughout the balance of the year. During the course of these meetings, we discussed and received constructive feedback on a broad range of topics, including our company strategy and performance, executive compensation, board tenure and composition, environmental and social sustainability initiatives and governance matters.

We also provide stockholders with opportunities throughout the year to engage with us. We participate in formal events, including sell-side analyst hosted conferences, non-deal roadshows, and investor visits to our communities. In addition, we speak with stockholders more informally during the year, particularly following the announcement of our quarterly earnings results.

Actions Taken Following 2022 and 2023 Stockholder Engagements 

We value our stockholders’ opinions and are responsive to them. At our 2023 annual meeting, stockholder support for our proposal on named executive compensation was 80%, an improvement from the prior year. The feedback we received in 2022 and 2023 through our stockholder engagement efforts shaped the following changes in our executive compensation programs, which we believe have helped strengthen the connection between our performance and executive compensation, as shown in the prior section:

The adjustments to our executive compensation programs complemented the following elements, which we have maintained for several years:

	What We Do			What We Don’t Do
	Engage with and consider stockholder input in designing our executive pay programs.			No re-pricing or cash-out of underwater stock options without stockholder approval.
	Link annual NEO incentive pay to objective, pre-set financial performance goals, which are three-year goals for long-term incentives.			We prohibit our NEOs (and our other employees and non-employee directors) from hedging or pledging their holdings of our securities.
	Solely utilize PSUs for our NEOs’ regular long-term incentive grants, and subject NEOs to robust stock ownership requirements.			No new executive officer severance arrangements above a certain amount without stockholder approval (see under “Severance Arrangements”).
	Include in employee equity awards a double-trigger vesting requirement in a change in control.			No new excise tax “gross-ups” for any officer or employee.
	Subject our executive officers to an updated incentive-based compensation recovery (a/k/a “clawback”) policy, adopted in 2023 per NYSE rules.			No payments of dividends or dividend equivalents on performance-based equity awards before they vest.
	Perform, under Compensation Committee oversight, annual risk assessments to determine that our employee compensation policies and programs are not likely to have a material adverse effect on us.			Avoid excessive perquisites. Perquisites are generally limited to market-competitive medical benefits and the opportunity to participate in a deferred compensation plan.
	Engage, at the sole direction of the Compensation Committee, an independent compensation consultant.
	Consider our sustainability-related programs’ progress in annual incentive plan IPF assessments.
	Maintain a relevant industry peer group.

Pay Program Overview

The table below sets forth the components of, and rationale for, each element of our executive compensation program.

As outlined above, we place a significant emphasis on at-risk, performance-based pay. As shown below, in 2023, approximately 93% of our CEO’s total direct compensation consisted of performance-based and/or at-risk vehicles. For our other NEOs, such vehicles, on average, approximated 82% of their total direct compensation.

NEO Compensation Components

Base Salaries

The Compensation Committee annually reviews and approves our CEO’s and our other NEOs’ base salaries. The Compensation Committee approves NEO base salaries after considering several factors, including an NEO’s experience, specific responsibilities, capabilities, individual performance and expected future contributions; our current and expected financial and operational results; and market pay levels and trends to ensure competitiveness.

In July 2023, based on an evaluation of these factors, our business trajectory and challenges, and our CEO’s recommendations, the Compensation Committee approved base salary increases for each NEO other than our CEO, who last received an increase in 2017, his only increase since 2007. Effective February 1, 2024, Mr. McGibney received an additional annual base salary increase in conjunction with his promotion to President and Chief Operating Officer.

2023 Annual Incentives

Our annual incentive program is designed to drive performance within a single fiscal year period, with pay outcomes tied to our performance on total adjusted pretax income (“API”). The program is based on two components. First, threshold and target API goals are set based on our internal operational objectives established near the beginning of each year, which take into account expected business conditions for the year. API is our total pretax income excluding certain compensation expense and certain inventory-related charges. Payouts under this first component are capped at 100% of the participants’ respective target level. Second, for the participants to earn any above-target payouts, API must exceed a hurdle based on a pre-set minimum asset efficiency objective. If the hurdle is met, an asset efficiency performance pool is funded for every dollar of API over the hurdle. The funded pool is then allocated based on the participants’ individual performance and contributions as measured under a structured scorecard methodology, which is outlined below, and such allocations are further limited by the individual maximum payout amounts approved under the plan. 

We view API as a comprehensive short-term measure of our senior officers’ performance, as it reflects their ability to produce profits by generating revenues, managing expenses and controlling fixed costs. In addition, with the homebuilding industry’s significant cyclicality and its volatility in recent years, using API as a primary measure intrinsically scales senior officer pay outcomes (down or up) to a degree relative to the API generated in a one-year period. Combining the API and asset efficiency measures is intended to motivate our senior officers to generate profitable growth aligned with our strategic goals.

In 2022, based on stockholder feedback and FWC’s recommendations, the Compensation Committee refined the annual incentive program to further align it with our strategic focus on expanding our scale and to incorporate features to enhance its rigor, including the following, which were maintained in the 2023 program:

The 2023 target payout opportunities remained the same as for 2022 and were set at 225% of base salary for our CEO, 175% for our COO and 140% for our other NEOs. As shown in the Grants of Plan-Based Awards During Fiscal Year 2023 table, maximum payout opportunities were limited to a multiple of target. The target and maximum opportunities were designed to generate payout levels that, if achieved, would appropriately reward strong performance for 2023, and together with base salary and long-term incentives, provide competitive total direct compensation.

2023 Annual Incentive Program Component Determinations 

Our NEOs received annual incentive payouts under the 2023 program as described below.

API Performance Relative to Goals Component 

The Compensation Committee set an API performance target of $500.0 million, a 44% decrease compared to our 2022 target API performance goal, and approximately 56% below our 2022 actual API performance. The 2023 performance target was set early in the year amid a highly uncertain operating environment and was based on then current and expected depressed housing market conditions, such as our forecast at the time that our 2023 first quarter net orders would be down between 50% and 60% year over year. Notwithstanding the challenging operating environment we expected and experienced in 2023, due to our executives’ strong performance, as described above and in the Annual Report, we achieved API of $858.6 million, approximately 27% lower than our actual 2022 API result of $1.18 billion. Although our actual 2023 API exceeded the target performance level, payouts were limited to 100% of each NEO’s individual target amount under this component of the program. As explained above and shown in the table below, this performance led to strictly formula-based payouts of 100% of target to our NEOs under the API performance component.

2023 API PERFORMANCE LEVELS AND PAYOUT SUMMARY 

API Performance Relative to Asset Efficiency Component 

Under this component, (a) two and one quarter percent of each dollar of API over our minimum asset efficiency objective of up to 110% of the API target, and (b) three and one quarter percent of each dollar of API above the level of 110% of our 2023 API target, funded an additional annual incentive pool to be allocated among the participating officers. The Compensation Committee set the minimum asset efficiency objective at a three percent return on inventory for 2023, consistent with the prior year. Therefore, the 2023 minimum asset efficiency objective increased to $160.2 million, up approximately 3% from the 2022 objective of $155.2 million. With the difference between our API and the minimum asset efficiency objective equal to about $698.4 million, the asset efficiency performance pool could be funded up to a total level of approximately $18.8 million.

Annual Incentive Compensation Scorecard and Individual Performance Factor (or “IPF”) 

The Compensation Committee determined the asset efficiency performance pool’s allocation to the participating officers guided by a detailed scorecard methodology through which their individual 2023 performance and contributions were assessed across four key dimensions: financial results, leadership, strategic planning and execution. Within the scorecard structure, each participating officer received points in each dimension based on our CEO’s assessment of their performance, and on the Compensation Committee’s assessment, with FWC’s assistance, of our CEO’s performance. The respective cumulative points a participating officer achieved corresponded to an IPF range with upper and lower limits of potential payouts to the officer of the total available asset efficiency performance pool. These pre-established IPF-based payout ranges, outlined below, took into consideration each participating officer’s 2023 annual incentive payout opportunities at threshold, target and maximum levels; historical relative annual incentive payouts by functional role; additional individual accomplishments and competitive market pay information.

2023 Annual Incentive Compensation Scorecard

Maximum Potential IPF per Cumulative Scorecard Points

Based on their respective cumulative scorecard assessment points, the Compensation Committee determined each NEO’s IPF, as shown in the table below, within the corresponding lower and upper IPF limits indicated on the above table.

The table below summarizes our NEOs’ individual performance contributions that informed their IPF assessments under the scorecard.

The Total Payout in the table below represents a cash payment to each officer other than Messrs. Mezger and Woram. Under the 2023 program terms, cash payouts were limited to 80% of a participating officer’s respective maximum payout opportunity, with any earned award balance above the cash maximum paid in time-vesting restricted stock in lieu of cash. As an annual incentive payout, this stock grant is not part of our separate long-term incentive program described below. Mr. Mezger’s total payout included $7,280,000 in cash, which was $1.0 million less than his cash maximum under the 2023 program terms, as the Compensation Committee decided to further reduce the cash payout under the plan by allocating the $1.0 million into time-vesting restricted stock in lieu of cash to additionally balance his overall cash and equity compensation and increase its alignment with stockholder value creation.  As a result, Mr. Mezger was granted a total of $1,678,644 in time-vesting restricted stock. Per the 2023 program, Mr. Woram’s total payout included $1,545,600 in cash and $31,383 in time-vesting restricted stock in lieu of cash. 

2023 ANNUAL INCENTIVE PROGRAM COMPONENT AND TOTAL PAYOUT LEVELS^(a)

2024 Annual Incentive Program 

The 2024 annual incentive program will be similar to our 2023 program, including a primarily formula-driven funding structure established by API and asset efficiency performance measures with payout levels determined by our outcomes on these measures and individual performance against key scorecard objectives. The pre-established 2024 annual incentive program’s API target performance goal will reflect, among other things, the Compensation Committee’s consideration of expected business conditions for the current year. 

Long-Term Incentives 

In October 2023, the Compensation Committee approved long-term incentive awards to our NEOs consisting solely of PSUs to reinforce the alignment of pay with our performance and stockholder value creation. The target values of these awards were again based on peer group and market data analysis. In order to maintain commensurate pay arrangements intended to reward strong long-term performance and help retain key talent, the following awards were made to our NEOs:

NEO LONG-TERM INCENTIVES GRANTED IN 2023 

Performance-Based Restricted Stock Units 

We have granted PSUs to our executive officers each year since 2012. As with prior PSU grants, the PSUs granted in 2023 are designed to focus our executive officers on achieving important long-term financial objectives over a three-year period. The 2023 PSU measures described below are a combination of absolute and relative metrics that should generate positive outcomes for our business, and, if achieved, are expected to be strong drivers of stockholder value creation.

The 2023 PSU amounts shown in the table above reflect a target award of shares of our common stock and their grant date fair value. Each 2023 PSU entitles a recipient to a grant of 0% to 200% of his target award depending on our performance relative to the above-noted performance measures over the three-year period of December 1, 2023 to November 30, 2026. The AEPS and AROIC measures’ performance will be determined on a tax-effected basis that excludes only pre-specified categories of compensation expense; certain inventory-related charges; and other extraordinary items approved by the Compensation Committee. Upon vesting, each 2023 PSU recipient is entitled to receive a proportionate amount of credited cash dividends that are paid in respect of one share of our common stock with a record date between the grant date and the date the Compensation Committee determines the applicable performance achievements, if any. Except for death, disability or certain retirement circumstances, a recipient will forfeit any rights to a 2023 PSU payout if the recipient terminates service before the date the Compensation Committee determines the applicable performance achievements. 

The following tables present our goals with respect to the 2020 – 2023 absolute PSU performance measures. As shown below, the goals for both the AEPS and AROIC measures generally increased year over year at threshold, target and maximum performance levels, reflecting the consistent improvement in our performance in the prior-year periods and stockholder feedback. As it relates to fiscal 2022, when the Compensation Committee established the PSU measures and goals in the fourth quarter of that year, homebuyer demand had turned sharply lower, stemming from higher mortgage interest rates, persistent inflationary pressures and an uncertain economic outlook, as discussed above. Given this environment, the Compensation Committee established 2022 PSU goals for both AEPS and AROIC that were lower than the goals for the same measures under the 2021 PSUs.  With market conditions relatively improved in our 2023 fourth quarter, the Compensation Committee established both AEPS and AROIC goals at levels higher than those for all prior years. These goals reflect our expectations regarding performance against the measures at the times that the goals were set.

We utilize a percentile rank approach to determine the target award multiplier for the relative revenue growth measure as outlined in the table below. Payouts for performance between the levels shown below are determined by straight-line interpolation.

As with our annual incentive program, the Compensation Committee intends the threshold performance levels outlined above to be reasonably achievable, yet uncertain to be met under expected market and business conditions at the time of grant. Target performance levels are designed to require significant management effort to achieve, and maximum performance levels are designed to be measurably more difficult to achieve than target performance levels. Each of these performance levels directly scale to threshold, target and maximum payout opportunities. As vesting for the PSUs granted in 2021 – 2023 will not be determined until after their respective performance periods end, we cannot predict the extent to which any shares under these awards will ultimately vest.

2020 PSU Awards 

The PSUs granted to our executive officers in 2020 entitled recipients to a grant of 0% to 200% of a target award of shares of our common stock based on our AEPS performance, AROIC performance, and relative revenue growth performance (with the respective rankings and multipliers as shown in the above table) over the three-year period of December 1, 2020 to November 30, 2023. The applicable AEPS and AROIC performance measures and goals are set forth below.

2020 PSU AWARD DETERMINATIONS 

The cumulative AEPS performance result for the 2020 PSUs exceeded the challenging $10.91 maximum goal level set at the time of grant and reflected our emphasis on and success at growing our diluted earnings per share by 125% amid volatile housing market conditions during the entire performance period. Historically strong profitability and cumulative adjusted net income of approximately $2.01 billion contributed to a significant increase in our adjusted return on invested capital, exceeding our maximum goal for this measure. The relative revenue ranking for the 2020 PSUs reflected our robust revenue growth performance over the applicable period and put us in a strong 2nd place within the peer group. Based on the relative revenue scale outlined in the above table, our performance placed us approximately at the 91st percentile of our peer group, resulting in a payment of 200% for this measure. All of these outcomes were uncertain at the time the 2020 PSUs were granted, and the Compensation Committee determined that they required significant management effort to achieve and sustain through the entirety of the performance period.

On February 28, 2024, the Compensation Committee certified the performance we achieved for the period ended November 30, 2023 and approved share grants with respect to the 2020 PSUs as set forth in the table below. Mr. McGibney was not a participant in the 2020 PSU program because he was not an eligible executive officer at the time the 2020 PSUs were granted.

2020 PSU AWARDS 

Executive Compensation Decision-Making Process and Policies

Pursuant to its charter, the Compensation Committee oversees the decision-making process for our executive compensation and benefits policies and programs. In making executive compensation decisions, the Compensation Committee considers a variety of factors and data, most importantly our performance and individual executives’ performance, and the totality of compensation that may be paid. Data the Compensation Committee considers includes our financial and operational performance, including comparisons to prior years’ performance, our current business plans and our peer group; surveys and forecasts of comparative general industry and peer group compensation and benefits practices; and, at least annually, management-prepared tally sheets for senior executives with up to six years of compensation data.

Role of Our Management and Compensation Consultants 

Our CEO, senior human resources and legal department executives, and FWC provide information and recommendations to assist the Compensation Committee’s decision-making and advise on compliance and disclosure requirements. The Compensation Committee does not delegate its decision-making authority to management, except for establishing certain performance goals under our performance cash program for participating division-level personnel and certain administrative actions under our current equity compensation plan, but only to the extent consistent with our equity-based award grant policy and applicable law. FWC, which the Compensation Committee directly retains, attends Compensation Committee meetings as needed, communicates between meetings with the Compensation Committee chair and other committee members, advises the Compensation Committee as to the CEO’s and other executive officers’ compensation, and assists the Compensation Committee with the annual employee compensation risk assessment, as discussed under “Management Development and Compensation Committee—Delegated Risk Oversight.” To maintain its independence and avoid any conflicts of interest, FWC may not work directly for our management unless the Compensation Committee pre-approves the work, including fees. During 2023, FWC did not provide any services that would have required such pre-approval. Based on its consideration of factors under New York Stock Exchange (“NYSE”) listing standards, the Compensation Committee determined that FWC’s work did not raise any conflicts of interest, and therefore considered FWC to be independent.

Peer Group

Our peer group is composed solely of U.S. public companies that, like us, are engaged in high production homebuilding as their primary business. We compete with all these companies for both homebuyers and management talent. The competition with these companies for talent reflects our, and their, need to attract and retain high caliber management and other personnel with strong high production homebuilding expertise and experience to execute business activities nationally as well as in specific local markets. Therefore, a principal focus of our compensation and benefits programs is to meet this critical competitive need. The Compensation Committee, in consultation with FWC and our management, periodically reviews and considers changes to our peer group. The Compensation Committee principally considers the competitive factors described above, as well as relative total revenues and market capitalization among the peer group companies. The Compensation Committee considers the composition of our peer group at least annually, and the group’s members were last adjusted during 2018.  As of their most recently filed proxy statements before the date of this Proxy Statement, each member of our peer group included us in its own peer group.

OUR PEER GROUP 

As of December 31, 2023, the reported total revenues (on a trailing 12-month basis) of the companies in our peer group were within a range of approximately 0.3 to 5.5 times our total revenues, and our total revenues of $6.41 billion placed us at the 46th percentile of the peer group. Also, as of December 31, 2023, the market capitalization of our peer group was within a range of approximately 0.2 to 10.2 times our market capitalization, and our market capitalization of $4.95 billion was in the second quartile of the peer group.

Equity Stock Ownership Policy

Our longstanding executive stock ownership policy is intended to encourage, and has encouraged, our executives to increase their ownership of our common stock over time and to align their interests with our stockholders’ interests. Under the policy, designated senior executives are expected to achieve specific levels of common stock ownership within five years of joining us or being promoted to a position with a higher ownership guideline and, once achieved, maintain such ownership throughout their employment with us. The targeted common stock ownership levels for our NEOs are as follows:

Common stock ownership includes shares directly owned by the NEO, and shares are valued at the greater of the most recent closing price on a valuation date and the closing price on the date shares are acquired. Designated executives are required to hold all vested net (after-tax) shares of time-vesting and performance-vesting restricted stock and up to 100% of net shares acquired through stock option exercises until their applicable stock ownership guideline is met, absent a hardship or other qualified exception. Each of our NEOs is in compliance with the requirements of the policy.

Prohibition on Hedging/Pledging of Our Securities 

To further align their interests with those of our stockholders, our employees and non-employee directors cannot engage in short sales of our securities and cannot buy or sell puts, calls or any other financial instruments that are designed to hedge or offset decreases or increases in the value of our securities. They also cannot hold our securities in a margin account or otherwise pledge our securities as collateral for any loan.

Equity-Based Award Grant Policy 

Our equity-based award grant policy governs the timing and establishes certain internal controls over the grant of equity-based awards, including stock options, restricted stock and PSUs. The policy requires that the Compensation Committee (or the Board) approve all grants of equity-based awards and their terms and does not permit delegation of this authority to our management. Per the policy, the exercise or grant price of any relevant equity-based award cannot be less than the closing price of our common stock on the grant date.

Compensation Recovery Policy 

The Board adopted in November 2023 an updated incentive-based compensation recovery policy per the applicable NYSE listing standard.  Under the policy, if we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws, we will be entitled to recover in accordance with the listing standard the amount of erroneously awarded incentive-based compensation an executive officer received. This policy replaced in its entirety a compensation recoupment policy the Board adopted in 2018. In addition, under our CEO’s employment agreement, we may require him to repay certain bonus and incentive- or equity-based compensation he receives as well as any profits realized from the sale of certain securities if we are required to restate our financial statements as a result of his misconduct, consistent with Section 304 of the Sarbanes-Oxley Act of 2002. 

Tax Implications of our Executive Compensation Program 

Due to changes to the Internal Revenue Code (“Code”) enacted in 2017, specifically repealing an exemption for performance-based compensation, we are generally not able to deduct compensation over $1.0 million paid to certain of our executive officers. The Compensation Committee will approve compensation that may not be deductible under the Code where it believes it is in our and our stockholders’ best interests to do so.

Indemnification Agreements 

We have entered into agreements with each NEO and certain other senior executives, which were updated in January 2024, that provide them with indemnification and advancement of expenses to supplement what our Certificate of Incorporation and insurance policies provide, subject to certain limitations.

Severance, Change in Control and Post-Termination Arrangements 

Severance Arrangements 

Mr. Mezger’s Employment Agreement and our Executive Severance Plan, in which all our NEOs participate, provide certain severance benefits, as discussed under “Potential Payments Upon Termination of Employment or Change in Control.” In considering our stockholders’ approval of an advisory proposal, in 2008 we adopted a policy under which we will obtain stockholder approval before paying severance benefits to an executive officer under a future severance arrangement in excess of 2.99 times the sum of the executive officer’s then-current base salary and target bonus. Future severance arrangements do not include arrangements existing when we adopted the policy or that we assume or acquire unless, in each case, any such arrangement is changed in a manner that materially increases its severance benefits.

Change in Control Arrangements 

Since 2001, we have maintained without modification the terms of a Change in Control Severance Plan (“CIC Plan”) that provides participants with certain benefits, as discussed under “Potential Payments Upon Termination of Employment or Change in Control.” The CIC Plan is intended to enable and encourage our management to focus its attention on obtaining the best possible result for our stockholders in a change in control, to promote management continuity, and to provide income protection if there is an involuntary loss of employment. All unvested employee equity awards require double-trigger vesting in a change in control.

Death Benefits 

Our Death Benefit Only Plan (“DBO Plan”), in which Messrs. Mezger and Praw participate, provides a $1.0 million death benefit to a participant’s designated beneficiary (plus an additional tax restoration amount sufficient to pay taxes on the benefit and the additional amount). We closed the plan to new participants beginning in 2006. Since then, only term life insurance, with a $750,000 benefit level, has been made available to incoming eligible executives, including Messrs. Kaminski, McGibney and Woram. We also maintain a $400,000 life insurance death benefit for designated beneficiaries of Mr. Mezger.

Other Benefits 

Most of our health and welfare benefits are made available to all full-time employees, including our NEOs. During 2023, as in prior years, our NEOs were eligible to participate in a supplemental plan that reimburses them for qualified out-of-pocket expenses that exceed amounts payable under our standard medical, dental and vision plans. Certain of our NEOs, and other employees, also participate in our unfunded nonqualified Deferred Compensation Plan (“DCP”), which is described below. These market-competitive benefits are offered to attract and retain key executive talent.

Retirement Programs 

The KB Home 401(k) Savings Plan (“401(k) Plan”), a qualified defined contribution plan, is the only post-employment benefit program we offer to all full-time employees. We provide a dollar-for-dollar match of 401(k) Plan and DCP contributions up to an aggregate of 6% of a participant’s base salary. Matching contributions generally vest after five years of service. 

The DCP allows participants to make pretax contributions of up to 75% of their base salary and 75% of their annual incentive compensation, and to select from one or more investment options in which their deferred compensation is deemed to be invested. As we do not provide a guaranteed rate of return under the DCP, a participant’s credited earnings depend on their investment elections. Deferred amounts together with any credited investment returns under the DCP are paid out to participants in a lump sum or in installments, commencing either at a participant-specified date during employment or upon termination of employment, subject to certain limitations. NEO deferrals under the DCP are shown in the Non-Qualified Deferred Compensation During Fiscal Year 2023 table. 

We also maintain a supplemental non-qualified, unfunded retirement plan (“Retirement Plan”) for certain executives, including Mr. Mezger, whose participation is shown in the Pension Benefits During Fiscal Year 2023 table. The Retirement Plan, closed to new participants since 2004 with no additional benefit accruals to participants (other than the same cost-of-living adjustments applied to federal Social Security benefits), provides each participant with specific annual payments for 20 years that begin upon the later of reaching age 55, the tenth anniversary of a participation commencement date or the termination of employment with us. Mr. Mezger’s original annual benefit amount under the Retirement Plan was $450,000. The change in our CEO’s pension value shown in the Summary Compensation Table for 2021 is a required reporting item and represents only the actuarial increase in our CEO’s Retirement Plan benefits based on interest rate fluctuations. It does not reflect any new plan benefits, cash or other compensation granted to or received by our CEO that year.

Management Development and Compensation Committee Report

The Management Development and Compensation Committee of the Board of Directors has reviewed and discussed the above “Compensation Discussion and Analysis” with KB Home management. Based on this review and discussion, the Management Development and Compensation Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement.

Management Development and Compensation Committee

Melissa Lora, Chair 
Arthur R. Collins 
Jodeen A. Kozlak 
Brian R. Niccol 
James C. Weaver

Executive Compensation

Summary Compensation Table

Grants of Plan-Based Awards During Fiscal Year 2023 

Outstanding Equity Awards at Fiscal Year-End 2023 

Option Exercises and Stock Vested During Fiscal Year 2023 

Pension Benefits During Fiscal Year 2023 

Non-Qualified Deferred Compensation During Fiscal Year 2023

Pay Versus Performance

The following table presents information as required under Item 402(v) of SEC Regulation S-K regarding the relationship for the three most recently completed fiscal years between the compensation of our NEOs – as reported in the Summary Compensation Table and adjusted to reflect “compensation actually paid” (“CAP”) as defined under SEC rules – and our performance relative to the identified metrics. Our compensation philosophy and how we align executive compensation with our performance is described under “Compensation Discussion and Analysis.” The CAP amounts disclosed do not reflect the actual amount of compensation earned, realized, or received by our NEOs during the applicable fiscal year. The Compensation Committee did not consider the information provided in this section in making its compensation decisions for the years shown.

Relationship between CAP and Financial Performance Measures

The graphs below illustrate the relationships between CAP for the PEO and the average CAP for our other NEOs, with (i) the cumulative TSR of our common stock, (ii) our net income, and (iii) our AEPS, each as set forth in the Pay Versus Performance table above, as well as the relationship between the cumulative TSR of our common stock and of the Dow Jones US Home Construction Index.

Pay Versus Performance Tabular List 

Below is a list of the most important financial performance measures we used to link CAP for our NEOs to our performance for the fiscal year ended November 30, 2023. Our use of these measures is discussed under “Compensation Discussion and Analysis.” 

CEO Pay Ratio

For our last completed fiscal year ended November 30, 2023: 

As of November 30, 2023, we had approximately 2,211 full-time and part-time employees. In identifying the median employee, we excluded our CEO and six employees who did not have regular earnings in the fiscal year due to extended leaves of absence or being hired at the end of November 2023. As the exact median employee compensation value fell between two employees whose W-2 compensation differed by approximately $65, we selected the individual with the longest tenure.

Because companies are allowed to identify the median employee and determine a CEO pay ratio using various methodologies, estimates and assumptions applicable to their own employee populations, compensation practices and other circumstances, the pay ratio other companies report – including those in our peer group – may not be comparable to the foregoing pay ratio. 

Potential Payments Upon Termination of Employment or Change in Control 

Based on the terms of certain of our employee benefit plans – primarily our Executive Severance Plan and our CIC Plan – our NEOs are entitled to certain payments and other benefits if their employment is terminated under certain circumstances and/or if we experience a change in control. Mr. Mezger is also entitled to certain payments and other benefits in such circumstances under the terms of his Employment Agreement. Per Section 409A of the Code, certain payments to our NEOs would not commence for six months following a termination of employment.

Termination of Employment 

If we terminate Mr. Mezger without cause or he resigns for good reason (each as defined in his Employment Agreement), or if we terminate any of the other NEOs without cause (as defined in the Executive Severance Plan), each is entitled to receive a cash severance payment equal to a multiple of base salary and average bonus. For Mr. Mezger, the severance amount is 2.0 times the sum of his annual salary plus average annual bonus earned for the prior three years, with the total payment capped at $6.0 million. Mr. Mezger would additionally receive a prorated bonus for the year in which his employment terminates. For our other NEOs, the severance amount is 2.0 times the sum of their respective annual base salary in effect at the time of termination and average bonus. The applicable average bonus is the lesser of (a) the average of the annual cash bonuses, if any, paid to them for the three most recent completed fiscal years prior to termination; or (b) 3.0 times their annual base salary. Each NEO is also entitled to a continuation of health coverage for up to two years. In each case, the foregoing benefits are subject to an affected NEO’s executing a release and post-termination non-solicitation (for two years), non-disparagement and confidentiality obligations.

For equity awards granted to Mr. Mezger on and after the effective date of his Employment Agreement, he is entitled to (a) two years of additional service credited to compute equity vesting plus full vesting for any equity issued to him in lieu of cash bonuses; (b) the earlier of 36 months and the original term duration of each equity grant to exercise any such outstanding equity; and (c) performance shares paid as if the performance period closed on the termination date if the performance period would otherwise close in the next 24 months. 

Change in Control

If Mr. Mezger’s employment is terminated without cause or he resigns for good reason in a change in control (generally, per his Employment Agreement, during the period starting three months before and ending 12 months after a change in control), he is entitled, subject to the same conditions described under “Termination of Employment,” to (a) a severance payment as described above, with a 3.0 times multiple rather than 2.0 times and total payment capped at $12.0 million; (b) health coverage continuation for up to two years; (c) full vesting and lump sum cash payment of deferred compensation, retirement or other employee benefits per the relevant arrangements, with any lump sum payments subject to Section 409A of the Code permitted only as provided by those arrangements; and (d) an additional amount to compensate for any excise taxes under Section 280G of the Code (“Section 280G”). 

If a change of control occurs, each of our other NEOs is entitled to receive, upon executing a release and if in the following 18-month period his employment is terminated other than for cause or disability, or he terminates employment for good cause (in each case, as defined in the CIC Plan), a severance benefit of 2.0 times the sum of his average base salary and average actual annual cash bonus for the three fiscal years prior to the year in which the change in control occurs. While Mr. Mezger is a CIC Plan participant, he can receive only CIC Plan benefits that do not duplicate those provided under his Employment Agreement, and his total CIC Plan severance benefit is capped at $12.0 million. 

Per the terms of each recipient’s award agreement, the vesting of our NEOs’ outstanding equity awards will not accelerate upon a change in control unless the recipient is terminated without cause or resigns for good reason within 18 months. Generally, if such a termination occurs (a) within the first year of the award’s performance period, the recipient will receive a target payout; (b) after the first year of the award’s performance period, the recipient will receive a payout determined using prorated calculations of the applicable performance measures; and (c) before the award’s performance period begins, the recipient will receive no payout of the award. In addition, under the CIC Plan, only Mr. Mezger and four other senior executives can potentially receive an additional tax restoration amount to compensate for any excise taxes imposed on them under Section 280G and for any taxes on the additional amount. Pursuant to a Board policy, since April 7, 2011, we have not extended this tax restoration benefit to any other officer or employee, including all the other NEOs, even though they are CIC Plan participants.

Other Change in Control and Employment Termination Provisions 

Our restricted stock award agreements provide for accelerated vesting upon the recipient’s death or disability. Our PSU award agreements provide for pro rata vesting if the recipient retires under certain circumstances, and for accelerated vesting upon death or disability; provided that any payout is delayed until the performance period is completed. The time a recipient can exercise a common stock option after termination of employment depends on the reason for termination. For example, they may have only five days if termination is for cause; while for retirement, death or disability, they may have the original term. 

Our DCP provides for full vesting of benefits if there is a change in control or disability, as defined under the plan, or death. Under our Retirement Plan, a participant will immediately receive a lump sum payment of the actuarial value (as specified under the plan) of the participant’s plan benefits if there is a change in control or death. Our DBO Plan provides for (a) distribution of an insurance contract to a participant sufficient to pay the death benefit (if death occurs before age 100); and (b) an additional tax restoration amount sufficient to pay specified taxes caused thereby, if there is a change in control as defined in the plan. We also maintain term life insurance policies that pay benefits upon certain NEOs’ deaths, as described under “Death Benefits.” 

The tables below show payments our NEOs may receive assuming various employment termination and change in control scenarios occurred on November 30, 2023, with equity awards valued at the $52.10 closing price of our common stock on that date. The tables reflect that references to “bonuses” in Mr. Mezger’s Employment Agreement, the Executive Severance Plan or the CIC Plan include the amounts in the Summary Compensation Table’s “Non-Equity Incentive Plan Compensation” column.  The amounts shown do not include the value of unexercised stock options reported in the Outstanding Equity Awards at Fiscal Year-End 2023 table, accrued Retirement Plan and DCP amounts reported in the Pension Benefits During Fiscal Year 2023 table and the Non-Qualified Deferred Compensation During Fiscal Year 2023 table (and associated footnotes), respectively, term life insurance benefits or generally available employee benefits. In none of the change in control scenarios below would our NEOs receive a tax restoration benefit under the CIC Plan, nor would our CEO receive a tax restoration benefit under his Employment Agreement.

Potential Payments Upon Termination Of Employment Or Change In Control 

Post-Employment Payments — Mr. Mezger 

Post-Employment Payments — Mr. Kaminski 

Post-Employment Payments — Mr. McGibney