D.R. Horton, Inc. Performance Unit Award 2008 Performance Unit Plan

Exhibit 10.4

D.R. Horton, Inc.
Performance Unit Award
2008 Performance Unit Plan
[_____] Year Performance Unit Award

Dear                      :

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

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

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

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

1. Award .

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

(b) After adjustment for forfeitures as provided in Section 2, the number of Performance Units granted to you will be adjusted based on Relative ROI and Relative NSG% (“Performance Percentage”) as provided in this Section. The adjusted number of Performance Units to which you will be entitled shall be equal to the number of Performance Units granted hereunder multiplied by the product of (i) 0.5 and (ii) the sum of the Performance Percentages set forth in Section 1(a) for the level of achievement of each of the performance goals therein (such product the “Adjusted Performance Percentage”). Notwithstanding the foregoing, the maximum number of Performance Units you can earn will be an aggregate of 200% of the original number granted to you, and the minimum number of Performance Units that will be awarded is zero. By way of example, assuming an initial grant of 200,000 Performance Units:

(c) (i) Except as provided in Section 2, the adjusted number of Performance Units, determined as provided in Section 1(b), will be multiplied by the Fair Market Value of the Company’s Common Stock on the last business day of the Performance Period (if payable in cash), or using the number of shares of the Company’s Common Stock (or fully vested Restricted Stock Units for deferred payments), equal to the adjusted number of Performance Units (if payable in equity), and may be further adjusted as provided in Sections 1(c)(iii) and (iv) below. Payment of amounts due under this Award shall be made to you as soon as practicable but no later than 30 days following certification by the Committee as set forth below, unless you timely elect a deferred payment in the manner and within the time frames specified by the Committee and in compliance with Code Section 409A (the “Payout Date”) . In the event of your death prior to the Payout Date, any amount payable to you under the Award will be paid to your designated beneficiary or, if none, to your estate. Prior to any payments under this Award, the Committee shall certify in writing, by resolution or otherwise, that the performance goals and any other material terms of the Award were in fact satisfied and the amount to be paid in respect of the Performance Units as a result of the achievement of the performance goals.

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

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

(iv) Prior to paying the Award, the Committee reserves the discretion to adjust downward the Award depending a variety of factors, including (i) the level of the Company’s consolidated pre-tax income or loss on both an adjusted and non-adjusted basis, (ii) the compensation earned by the participant in comparison to the compensation earned by other Company executives and executives of the Company’s Peer Group, (iii) the participant’s overall compensation, (iv) the participant’s individual performance, and (v) other factors listed in the 2008 Plan.

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

2. Early Termination and Change in Control .

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