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Governance

As strong corporate governance is a key driver of long-term stockholder value, our Board of Directors has implemented a robust structure and leading practices to oversee the management of our business and assure that our stockholders’ interests are being served.

Our Board’s approach to corporate governance aligns with the principles of the Investor Stewardship Group, which is a coalition of some of the world’s largest investors and asset managers, including several of our top stockholders, as summarized below.

Investor Stewardship Group
Corporate Governance Principles

Principle

What We Do

  • Boards are accountable to stockholders

  • The Board is unclassified, and directors stand for election annually.

  • Directors must receive a majority of votes cast for their election in an uncontested election.

  • Stockholders approved measures with potential “anti-takeover” effects to protect our valuable deferred tax assets.

  • Stockholders should be entitled to voting rights in proportion to their economic interest

  • We have one class of outstanding voting securities that allow each holder one vote for each share held.

  • Board should be responsive to stockholders and be proactive in order to understand their perspectives

  • Stockholders may communicate with us and the Board.

  • We proactively engage with our stockholders year-round on environmental, social and governance (ESG) matters, our business strategy, performance and outlook. Matters raised in these engagements are actively discussed with directors as relevant.

  • Boards should have a strong, independent leadership structure

  • The Board has a strong independent lead director with significant responsibilities and authority.

  • Independent directors lead all Board committees.

  • Boards should adopt structures and practices that enhance their effectiveness

  • Directors have extensive and relevant experience and skills.

  • All directors, except our President and Chief Executive Officer, are independent.

  • 42% of our directors are women or ethnic minorities.

  • Our Board committees are comprised of only independent directors.

  • Directors are highly engaged, and average Board meeting attendance during 2021 was 96%; average committee meeting attendance was 88% or higher.

  • Directors can access all levels of our organization and outside advisors for information about our business and their Board roles.

  • In 2020, with multiple directors then approaching retirement age, the Board initiated a proactive plan to refresh its membership that resulted in two new directors joining the Board in 2020 and two additional directors being elected in 2021.

  • Boards should develop management incentive structures that are aligned with the long-term strategy of the Company

  • In 2021, our Say-on-Pay proposal received 85% support

  • Management compensation is designed to advance our long-term strategic goals, with significant emphasis placed on at-risk, performance-based pay. Information regarding our compensation plans is provided in our 2022 Proxy Statement.

The Board oversees our sustainability program and initiatives as part of our overall business strategy and has delegated certain risk oversight responsibilities to its committees. The Audit and Compliance Committee assesses environmental sustainability; the Management Development and Compensation Committee evaluates workforce diversity and inclusion, and health and safety matters; and the Nominating and Corporate Governance Committee has oversight of all governance matters. Two directors – Arthur R. Collins and Dorene C. Dominguez – are the Board’s liaisons to management on ESG.

In addition to Board-level governance, we have a number of internal and external structures in place that are specifically tasked with advancing our sustainability strategies and actions throughout our organization:

National Advisory Board (NAB)
Comprised of nationally recognized leaders across diverse disciplines that provide an independent perspective on our sustainability initiatives and progress, which help shape our sustainability priorities, reporting and our approach to stakeholder engagement. Our NAB meets twice a year and includes participation from our Chairman, President and Chief Executive Officer and Senior Vice President for Sustainability. We also consult with our NAB members throughout the year on specific issues and emerging topics.

Sustainability Leadership Team
A group of high-level KB Home executives, led by one of our Executive Vice President and Co-Chief Operating Officers and our Senior Vice President for Sustainability, including select Division Presidents, convenes on a regular basis to discuss sustainability strategies, craft, and refine Company policies and initiatives, and create buy-in with leaders across all of our operating regions and major functional departments.

ESG Steering Committee
An internal group of senior executives across multiple disciplines, led by our Senior Vice President of Investor Relations, interacts with key external stakeholders, raising our ESG profile across the Company and enhancing the transparency and disclosure of our initiatives.

Environmental Management System (EMS)
We also have established an environmental management system, as defined by the U.S. Environmental Protection Agency, designed to facilitate, and advance a continual cycle of planning, implementing, measuring, and evaluating of our greenhouse gas emission reduction efforts. Details about our EMS is available in our 2020 Sustainability Report.