KB HOMEKBH
KB HOME Stock Compensation Disclosure
Employee Benefit and Stock Plans
Most of our employees are eligible to participate in the KB Home 401(k) Savings Plan (“401(k) Plan”) under which we
match employee contributions up to 6% of eligible compensation per payroll period. The aggregate cost of the 401(k) Plan to
us was $9.0 million in 2025, $8.8 million in 2024 and $8.3 million in 2023. The assets of the 401(k) Plan are held by a third-
party trustee, with an affiliate of the trustee managing some fund options offered by the 401(k) Plan. The 401(k) Plan
participants may direct the investment of their funds among one or more of the several fund options offered by the 401(k) Plan.
As of November 30, 2025, 2024 and 2023, approximately 4%, 6% and 5%, respectively, of the 401(k) Plan’s net assets at each
period were invested in our common stock.
Approval of the Amended and Restated KB Home 2014 Equity Incentive Plan. We maintain one active equity
compensation plan, the Amended and Restated KB Home 2014 Equity Incentive Plan (“Amended and Restated 2014 Plan”),
with an aggregate share grant capacity for stock-based awards to our employees, non-employee directors and consultants of
18,200,000 shares. In addition, if an award made under the Amended and Restated KB Home 2014 Equity Incentive Plan
subsequently expires or is canceled, forfeited or settled for cash, then any shares associated with such award may, to the extent
of such expiration, cancellation, forfeiture or cash settlement, be used again for new grants under the plan, and shares tendered
or withheld to satisfy tax withholding obligations with respect to a full value award may be used again for new grants under the
plan. Under the Amended and Restated 2014 Plan, grants of stock options and other similar awards reduce the share grant
capacity on a 1-for-1 basis, and grants of restricted stock and other similar “full value” awards reduce the share grant capacity
on a 1.78-for-1 basis. Any shares that again become available for grant will be added back to the equity incentive plan’s
available grant capacity in the same manner in which they were initially deducted (i.e., 1-for-1 or 1.78-for-1). The Amended
and Restated 2014 Plan provides that stock options may be awarded for periods of up to 10 years, and enables us to grant other
stock-based awards and cash bonuses.
Stock-Based Compensation. With the approval of the management development and compensation committee, consisting
entirely of independent members of our board of directors, we have provided compensation benefits to certain of our employees
in the form of stock options, restricted stock and PSUs. Certain stock-based compensation benefits are also provided to our
non-employee directors pursuant to the Non-Employee Directors Compensation Plan (“Director Plan”). Compensation expense
related to equity-based awards is included in selling, general and administrative expenses in our consolidated statements of
operations. Stock-based compensation expense for 2025 included $16.0 million recognized on an accelerated basis for certain
equity awards granted in October 2025 that included new provisions for accelerated vesting of restricted stock and continued
vesting of PSUs for long-tenured employees upon retirement. The following table presents our stock-based compensation
expense (in thousands):
Years Ended November 30, | |||||
2025 | 2024 | 2023 | |||
Restricted stock | $14,956 | $10,699 | $9,659 | ||
PSUs | 29,630 | 22,296 | 23,065 | ||
Director awards | 1,652 | 1,475 | 1,888 | ||
Total | $46,238 | $34,470 | $34,612 | ||
Stock Options. Stock option transactions are summarized as follows:
Years Ended November 30, | |||||||||||
2025 | 2024 | 2023 | |||||||||
Options | Weighted Average Exercise Price | Options | Weighted Average Exercise Price | Options | Weighted Average Exercise Price | ||||||
Options outstanding at beginning of year | 418,141 | $16.17 | 1,109,567 | $15.50 | 1,674,393 | $15.56 | |||||
Granted | — | — | — | — | — | — | |||||
Exercised | (67,277) | 15.94 | (691,426) | 15.09 | (564,826) | 15.68 | |||||
Cancelled | — | — | — | — | — | — | |||||
Options outstanding at end of year | 350,864 | $16.21 | 418,141 | $16.17 | 1,109,567 | $15.50 | |||||
Options exercisable at end of year | 350,864 | $16.21 | 418,141 | $16.17 | 1,109,567 | $15.50 | |||||
Options available for grant at end of year | 7,203,338 | 7,794,922 | 8,245,553 | ||||||||
There were no stock options granted in 2025, 2024 or 2023. We have not granted any stock option awards since 2016.
The total intrinsic value of stock options exercised was $3.2 million in 2025, $32.7 million in 2024 and $17.4 million in 2023.
The aggregate intrinsic value of both stock options outstanding and stock options exercisable was $16.9 million at
November 30, 2025, $27.8 million at November 30, 2024, and $40.6 million at November 30, 2023. The intrinsic value of a
stock option is the amount by which the market value of the underlying stock exceeds the price of the option.
All of the stock options outstanding and stock options exercisable at November 30, 2025 had an exercise price of $16.21
and a remaining contractual life of .8 years. At November 30, 2025, there was no unrecognized stock-based compensation
expense related to stock option awards as all these awards were fully vested.
Restricted Stock. From time to time, we grant restricted stock to various employees as a compensation benefit. During the
restriction periods, these employees are entitled to vote and to receive cash dividends on such shares. Except as to recipients of
the restricted stock awards granted in October 2025 who were retirement-eligible on the grant date or who become retirement-
eligible during the standard vesting period, the restrictions imposed with respect to the shares granted lapse in installments
within, or in full at the end of, three years after their grant date if certain conditions are met.
Restricted stock transactions are summarized as follows:
Years Ended November 30, | |||||||||||
2025 | 2024 | 2023 | |||||||||
Shares | Weighted Average per Share Grant Date Fair Value | Shares | Weighted Average per Share Grant Date Fair Value | Shares | Weighted Average per Share Grant Date Fair Value | ||||||
Outstanding at beginning of year | 457,140 | $50.45 | 588,167 | $21.29 | 543,886 | $19.50 | |||||
Granted | 165,707 | 58.79 | 181,287 | 74.46 | 329,209 | 41.78 | |||||
Vested | (263,561) | 44.73 | (292,217) | 37.48 | (268,696) | 42.12 | |||||
Cancelled | (39,258) | 51.18 | (20,097) | 35.88 | (16,232) | 32.24 | |||||
Outstanding at end of year | 320,028 | $59.43 | 457,140 | $50.45 | 588,167 | $21.29 | |||||
As of November 30, 2025, we had $15.2 million of total unrecognized compensation cost related to restricted stock awards
that will be recognized over a weighted average period of approximately three years.
Performance-Based Restricted Stock Units. On October 9, 2025, we granted PSUs to certain employees. Each PSU grant
corresponds to a target amount of our common stock (“Award Shares”). Each PSU entitles the recipient to receive a grant of
between 0% and 200% of the recipient’s Award Shares, and will vest based on our achieving, over a three-year period
commencing on December 1, 2025 and ending on November 30, 2028, specified levels of (a) cumulative adjusted earnings per
share; (b) average adjusted return on invested capital; and (c) revenue growth performance relative to a peer group of high-
production public homebuilding companies. The grant date fair value of each such PSU was $57.59. Upon vesting, each 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 of our board of directors
determines the applicable performance achievements, if any. On October 10, 2024, we granted PSUs to certain employees with
generally similar terms as the 2025 PSU grants, except that the applicable performance period commenced on December 1,
2024 and ends on November 30, 2027. The grant date fair value of each such PSU was $79.81. On October 5, 2023, we
granted PSUs to certain employees with generally similar terms as the 2025 PSU grants, except that the applicable performance
period commenced on December 1, 2023 and ends on November 30, 2026. The grant date fair value of each such PSU was
$44.10.
PSU transactions are summarized as follows:
Years Ended November 30, | |||||||||||
2025 | 2024 | 2023 | |||||||||
Shares | Weighted Average per Share Grant Date Fair Value | Shares | Weighted Average per Share Grant Date Fair Value | Shares | Weighted Average per Share Grant Date Fair Value | ||||||
Outstanding at beginning of year | 1,156,049 | $44.12 | 1,225,415 | $21.18 | 1,273,157 | $19.70 | |||||
Granted | 546,814 | 57.59 | 450,270 | 70.66 | 554,523 | 39.80 | |||||
Vested | (530,015) | 39.31 | (519,636) | 40.06 | (602,265) | 35.20 | |||||
Cancelled | (20,282) | 40.54 | — | — | — | — | |||||
Outstanding at end of year | 1,152,566 | $49.01 | 1,156,049 | $44.12 | 1,225,415 | $21.18 | |||||
The number of shares of our common stock actually granted to a recipient, if any, upon the vesting of a PSU depends on
the degree of achievement of the applicable performance measures during the designated three-year performance period. The
shares of our common stock that were granted under the terms of PSUs that vested in 2025 included an aggregate of 235,562
shares above the target amount awarded to the eligible recipients based on performance from December 1, 2021 through
November 30, 2024. PSUs that vested in 2024 included an aggregate of 259,818 shares above the target amount based on
performance from December 1, 2020 through November 30, 2023, and PSUs that vested in 2023 included an aggregate of
267,674 shares above the target amount based on our performance from December 1, 2019 through November 30, 2022. PSUs
do not have dividend or voting rights during the performance period. Compensation cost for PSUs is initially estimated based
on target performance achievement and adjusted as appropriate throughout the performance period. Accordingly, future
compensation costs associated with outstanding PSUs may increase or decrease based on the probability and extent of
achievement with respect to the applicable performance measures. At November 30, 2025, total unrecognized compensation
cost related to unvested PSUs was $32.1 million, which is expected to be recognized over a weighted-average period of
approximately three years.
Director Awards. We have granted deferred common stock awards to our non-employee directors pursuant to the terms of
the Director Plan and elections made by each director. At November 30, 2025, 2024 and 2023, the aggregate outstanding
deferred common stock awards granted under the Director Plan were 100,840, 86,504 and 271,683, respectively. In addition,
we have granted common stock on an unrestricted basis to our non-employee directors on the grant date pursuant to the
Director Plan and elections made by each director.
Grantor Stock Ownership Trust. At November 30, 2023, we had a grantor stock ownership trust (“Trust”), which was
established in 1999 and administered by a third-party trustee, that held and distributed the shares of common stock acquired to
support certain employee compensation and employee benefit obligations under our existing stock option plan, the 401(k) Plan
and other employee benefit plans. For financial reporting purposes, the Trust was consolidated with us, and therefore any
dividend transactions between us and the Trust were eliminated. Acquired shares held by the Trust were valued at the market
price on the date of purchase and shown as a reduction to stockholders’ equity in the consolidated balance sheets. The
difference between the Trust share value and the market value on the date shares were released from the Trust was included in
paid-in capital. Common stock held in the Trust was not considered outstanding in the computations of earnings per share. The
Trust terminated on September 30, 2024. The 6,705,247 shares held by the Trust were transferred to treasury stock.About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.