NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS

To Be Held May 8, 2018

10700 Pecan Park Blvd., Suite 150

Austin, Texas 78750

To Forestar Stockholders:

WHEN AND WHERE THE ANNUAL MEETING OF STOCKHOLDERS WILL BE HELD

The 2018 annual meeting of our stockholders will be held at our offices located at 10700 Pecan Park Blvd., Suite 150, Austin, Texas 78750, on Tuesday, May 8, 2018, at 11:00 a.m. Austin, Texas time.

PURPOSES OF THE MEETING

The meeting will be held for the following purposes:

WHO CAN ATTEND AND VOTE

Our Board of Directors has fixed the close of business on March 15, 2018 as the record date for determining who is a stockholder entitled to receive notices about the annual meeting and to vote at the annual meeting or any later meeting if the annual meeting is adjourned or postponed. Only stockholders who own stock on the record date are entitled to receive notices about the annual meeting and to vote at the annual meeting.

If you need help voting your shares, please call 866-232-3037 (domestic) or 720-358-3640 (international).

DONALD J. TOMNITZ

Executive Chairman

March 29, 2018

Austin, Texas

Your vote is important. You are invited to attend the meeting in person. If you need directions to the meeting location, you may contact our Corporate Secretary by phone at (512) 433-5200 or by mail at our address noted above. Whether or not you plan to attend the meeting, and no matter how many shares you own, please vote over the internet or by telephone, or, if you received by mail or printed a paper proxy card, you may also vote by signing, dating and returning the proxy card by mail. By voting before the meeting, you will help us ensure that there are enough stockholders voting to hold a meeting and avoid added proxy solicitation costs. If you attend the meeting, you may vote in person, if you wish, even if you have previously submitted a proxy. You may revoke your proxy at any time by following the instructions under “Voting Information — How you can change or revoke your vote.”

Important Notice Regarding Availability of Proxy Materials for the 2018 Annual Meeting of Stockholders to be held on May 8, 2018. The 2018 Proxy Statement, along with our Annual Report on Form 10-K for 2017, are available at
http://investor.forestargroup.com/phoenix.zhtml?c=216546&p=irol-sec.

TABLE OF CONTENTS

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10700 Pecan Park Blvd., Suite 150

Austin, Texas 78750

PROXY STATEMENT

for the

2018 ANNUAL MEETING OF STOCKHOLDERS

VOTING INFORMATION

General

Our Board of Directors seeks your proxy for use in voting at our 2018 annual meeting of stockholders to be held on Tuesday, May 8, 2018, at 11:00 a.m. Austin, Texas time, and at any later meeting if the annual meeting is adjourned or postponed. This Proxy Statement, our 2017 Annual Report to Stockholders (which includes our audited financial statements) (“Annual Report”) and proxy card or voting instructions were made available to you over the internet on or about March 29, 2018. The Annual Report does not constitute any part of the material for the solicitation of proxies.

Record Date

Holders of our common stock as of the close of business on March 15, 2018, the record date, may vote at the 2018 annual meeting, either in person or by proxy. At the close of business on March 15, 2018, there were 41,938,936 shares of our common stock outstanding and entitled to vote at the annual meeting. The common stock is our only authorized voting security, and each share of our common stock is entitled to one vote on each matter properly brought before the annual meeting.

Purpose of the Annual Meeting

At the annual meeting, the stockholders will be asked to vote on the following proposals:

Internet Availability of Proxy Materials

We are using the rule of the Securities and Exchange Commission (“SEC”) that allows companies to furnish proxy materials to their stockholders over the internet. In accordance with this rule, on or about March 29, 2018, we sent stockholders of record at the close of business on March 15, 2018, a Notice Regarding the Internet Availability of Proxy Materials (“Notice”). The Notice contains instructions on how to access our Proxy Statement, Annual Report and proxy card via the internet and how to vote. You will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review all of the important information contained in the proxy materials. The Notice also instructs you on how you may submit your proxy via the internet. If you received a Notice and would like to receive a copy of our proxy materials, follow the instructions contained in the Notice to request a copy electronically or in paper form on a one-time or ongoing basis.

Difference Between Holding Shares as a Stockholder of Record and as a Beneficial Owner

If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered the “stockholder of record” with respect to those shares, and the Notice has been sent directly to you.

If your shares are held in a stock brokerage account or by a bank or other nominee, those shares are held in “street name” and you are considered the “beneficial owner” of the shares, and a notice of internet availability of proxy materials has been forwarded to you by your broker, bank or other nominee, who is the stockholder of record. You will receive separate instructions from your broker, bank or other holder of record describing how to vote your shares.

Voting Your Shares

If you hold shares in your own name as a stockholder of record, you may cast your vote in one of four ways:

If you are a beneficial owner of shares held in street name, your broker, bank or other nominee will provide you with materials and instructions for voting your shares. The availability of telephone or internet voting will depend on the voting process of the institution holding your shares. Please check with your bank or broker and follow the voting procedures they provide to vote your shares.

If you properly submit your proxy by one of these methods, and you do not subsequently revoke your proxy, your shares will be voted in accordance with your instructions.

If your shares are held in your own name as a stockholder of record and you return your signed proxy card or vote by telephone or internet but do not specify a voting choice, your shares will be voted as follows:

Broker Discretionary Voting If You Do Not Instruct Your Broker On How To Vote Your Shares

Brokers do not have discretionary authority to vote on the proposals to elect directors, to make an advisory vote on executive compensation and to approve our 2018 Stock Incentive Plan if they do not receive instructions from a beneficial owner. Accordingly, if you are a beneficial owner, you must instruct your broker on how to

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vote your shares on these proposals in order for your votes to be counted. Brokers have discretionary authority to vote on the ratification of selection of auditors if they do not receive instructions from a beneficial owner.

Voting in Person at the Annual Meeting

If you hold shares in your own name as a stockholder of record, you are invited to attend the annual meeting and cast your vote at the meeting by properly completing and submitting a ballot at the meeting. If you are the beneficial owner of shares held in the name of your broker, bank or other nominee, you are invited to attend the meeting in person, but in order to vote at the meeting you must first obtain a legal proxy from your broker, bank or other nominee giving you the right to vote those shares and submit that proxy along with a properly completed ballot at the meeting.

How You Can Change or Revoke Your Vote

If you hold shares in your own name as a stockholder of record, you may change your vote or revoke your proxy at any time before voting begins at the Annual Meeting by:

Attendance at the meeting, in and of itself, will not cause your previously granted proxy to be revoked unless you vote at the meeting.

We must receive your notice of revocation or later-dated proxy at or prior to voting at the annual meeting for it to be effective. It should be delivered to:

Forestar Group Inc.

10700 Pecan Park Blvd., Suite 150

Austin, Texas 78750

Attention: Corporate Secretary

Alternatively, you may hand deliver a written revocation notice, or a later-dated proxy, to the Corporate Secretary at the annual meeting before the voting begins.

If you are the beneficial owner of your shares held in street name and you wish to change your vote, please check with your bank or broker and follow the procedures provided by them.

Quorum

The presence at the annual meeting, in person or by proxy, of holders of 20,969,469 shares (a majority of the votes entitled to be cast by the stockholders entitled to vote as of the record date) is required to constitute a quorum to transact business at the meeting. Proxies marked “abstain” and broker “non-votes” (each of which are explained below) will be counted in determining the presence of a quorum.

If the shares present in person or represented by proxy at the annual meeting are not sufficient to constitute a quorum, the stockholders by a vote of the holders of a majority of the votes entitled to be cast by the stockholders, present in person or by proxy at the meeting (which may be voted by the proxyholders at the meeting), may, without further notice to any stockholder (unless a new record date is set or the adjournment is for more than 30 days), adjourn the meeting to a different time and place to permit further solicitations of proxies sufficient to constitute a quorum. At any such adjourned meeting at which a quorum may be present, any business may be transacted that might have been transacted at the meeting as originally called.

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Abstentions

An abstention occurs when a stockholder sends in a proxy with explicit instructions to decline to vote regarding a particular proposal. An abstention with respect to any proposal for the annual meeting will not be counted as a vote “cast” for or against the proposal. Consequently, an abstention with respect to any of the proposals scheduled for a vote at the annual meeting will not affect the outcome of the vote.

Broker Non-Votes

Broker “non-votes” are shares held by brokers or nominees for which voting instructions have not been received from the beneficial owners or the persons entitled to vote those shares and the broker or nominee does not have discretionary voting power under rules applicable to broker-dealers so the broker is unable to vote those uninstructed shares. A broker “non-vote” with respect to a proposal will not be counted as a vote “cast” for or against the proposal. Consequently, a broker “non-vote” will not affect the outcome of the vote.

Required Votes

Election of Directors

To elect a director nominee, the votes cast “for” that nominee must exceed the votes cast “against” that nominee. In accordance with our corporate governance guidelines, each incumbent nominee who does not receive the required vote for election must tender his or her resignation to our Executive Chairman for consideration by the Nominating and Governance Committee of our Board of Directors. For more information on the operation of our majority voting standard, see the section on “Election of Directors.” Stockholders may not cumulate votes in the election of directors.

Advisory Approval of the Company’s Executive Compensation

To approve the non-binding resolution regarding approval of executive compensation, the “for” votes cast in favor of the matter must exceed the “against” votes cast against the matter.

Approval of 2018 Stock Incentive Plan

To approve our 2018 Stock Incentive Plan, the “for” votes cast in favor of the matter must exceed the “against” votes cast against the matter.

Ratification of Independent Auditors

To ratify appointment of our independent registered public accounting firm, the “for” votes cast in favor of the matter must exceed the “against” votes cast against the matter.

Proxy Solicitation; Counting the Votes

We are soliciting your proxy for the annual meeting and will pay all the costs of the proxy solicitation process. Our directors, officers and employees may solicit the return of proxies by personal contact, mail, electronic mail, facsimile, telephone or the internet. We may also issue press releases asking for your vote or post letters or notices to you on our website, www.forestargroup.com. Our directors, officers and employees will not receive additional compensation, but will be reimbursed for out-of-pocket expenses. We will request brokerage houses and other custodians, nominees and fiduciaries to forward solicitation material to the beneficial owners of our common stock. We will reimburse them for costs they incur in the solicitation.

Representatives of Broadridge Financial Solutions, Inc. will tabulate the votes and act as inspectors of election to certify the results.

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Merger Transaction with D.R. Horton

On June 29, 2017, we entered into an Agreement and Plan of Merger with D.R. Horton, Inc. (“D.R. Horton”) and a wholly-owned subsidiary of D.R. Horton (“Merger Sub”). At the effective time on October 5, 2017, we merged (the “Merger”) with Merger Sub and we continued as the surviving entity in the Merger. In the Merger, each existing share of our common stock issued and outstanding immediately prior to the effective time (the “Former Forestar Common Stock”) was converted into the right to receive, at the election of the holders of the shares of Former Forestar Common Stock, either an amount in cash equal to $17.75 per share (the “Cash Consideration”) or one new share of our common stock (the “New Forestar Common Stock”), subject to proration procedures applicable to oversubscription and undersubscription for the Cash Consideration as described in the merger agreement. The aggregate amount of the Cash Consideration paid by D.R. Horton to holders of Former Forestar Common Stock in the Merger was $558,256,000, and D.R. Horton funded the payment of the Cash Consideration with cash on hand. In the Merger, 10,487,873 shares of New Forestar Common Stock (representing approximately 25% of the outstanding shares of New Forestar Common Stock immediately after the effective time) were issued to the holders of our common stock and 31,451,063 shares of New Forestar Common Stock (representing approximately 75% of the outstanding shares of the New Forestar Common Stock immediately after the effective time) were issued to D.R. Horton.

Subject to the terms of the merger agreement, at the effective time, each equity award made or otherwise denominated in shares of Former Forestar Common Stock that was outstanding immediately prior to the effective time under our equity compensation plans was cancelled as of the effective time. In exchange for the cancellation of the equity awards, each holder of an equity award received from us the Cash Consideration for each share of Former Forestar Common Stock underlying such equity award (and in the case of equity awards that were stock options or stock appreciation rights, less the applicable exercise or strike price, but not less than $0), whether or not otherwise vested as of the effective time. With respect to any of our market-leveraged stock units, the number of shares of Former Forestar Common Stock subject to such equity awards were determined pursuant to the terms set forth in the applicable award agreements and based on a per share value equal to $17.75.

As of October 5, 2017, we became a majority-owned subsidiary of D.R. Horton and a controlled company under New York Stock Exchange rules. As a controlled company, we are not required to have a majority of independent directors, an independent compensation committee, or an independent nominating committee. However, at this time we intend to maintain a majority of independent directors and both an independent compensation committee and nominating committee. For further discussion, see the section on “Certain Relationships and Related Party Transactions — Stockholder’s Agreement.”

In connection with the Merger, we entered into a Stockholder’s Agreement with D.R. Horton that provides for certain board and board committee appointment rights. For more information on the Stockholder’s Agreement, see the sections on “Election of Directors — Stockholder’s Agreement” and “Certain Relationships and Related Party Transactions — Stockholder’s Agreement.”

Additional information regarding the merger agreement, including a copy of the merger agreement, can be found in our Current Report on Form 8-K filed with the SEC on June 29, 2017.

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VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS

Security Ownership of Certain Beneficial Owners

The name, address and stock ownership of each person or group of persons known by us to own beneficially more than five percent of the outstanding shares of our common stock as of the close of business on March 15, 2018 follows.

Security Ownership of Management

The following table sets forth information regarding the beneficial ownership of our common stock as of the close of business on March 15, 2018 by:

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We determined beneficial ownership as reported in the table in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Unless otherwise indicated, beneficial ownership includes both sole voting and sole dispositive power. Even though SEC rules require reporting of all the shares listed in the table, the directors and executive officers may not claim beneficial ownership of all of these shares. For example, a director or executive officer might not claim beneficial ownership of shares owned by a relative. Unless otherwise indicated, the table does not include any shares that may be held by pension and profit-sharing plans of the corporations or endowment funds of educational and charitable institutions for which various directors and officers serve as directors or trustees.

Section 16(a) Beneficial Ownership Reporting Compliance

We have not identified any person who failed to file on a timely basis reports required by Section 16(a) of the Exchange Act in respect of our common stock during the most recent fiscal year. For purposes of identifying persons who failed to timely file Section 16(a) reports, we only reviewed Forms 3, 4, and 5, amendments to these forms, and written representations supplied to us in lieu of Form 5 under the SEC’s Section 16 rules for the most recent fiscal year.

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ELECTION OF DIRECTORS

Stockholder’s Agreement

In connection with the Merger, we entered into a Stockholder’s Agreement with D.R. Horton that provides for certain board and board committee appointment rights. Under the terms of the Stockholder’s Agreement and our Amended and Restated Certificate of Incorporation, immediately following the Merger, and for the fifteen-month period following the Merger (i.e., until January 5, 2019), our Board will have five directors, comprised of four individuals designated by D.R. Horton (which will include our Executive Chairman and at least two independent directors) and one individual designated by mutual agreement of us and D.R. Horton prior to the Merger (the “Legacy Director”) or his replacement. D.R. Horton has designated Messrs. Fuller, Ringler, Spitzer and Tomnitz as directors, and Mr. Hudson has been designated as the Legacy Director. On October 5, 2017, effective upon the closing of the Merger, Messrs. Rubright, Silvers, Smith, Squires and Weber resigned from the board.

Thereafter, at all times when D.R. Horton and its affiliates beneficially own 20% or more of our voting securities, the Board will have five directors unless otherwise agreed in writing between us (as approved by a majority of our independent directors) and D.R. Horton, and D.R. Horton will have the right to designate a number of directors equal to the percentage of our voting securities beneficially owned by D.R. Horton and its affiliates multiplied by the total number of directors that we would have if there were no vacancies, rounded up to the nearest whole number (and in any event not less than one). We and D.R. Horton have also each agreed to use reasonable best efforts to cause at least three of the directors to be considered “independent” under the rules of the SEC and under applicable listing standards.

For more information on the Stockholder’s Agreement, see the section on “Certain Relationships and Related Party Transactions — Stockholder’s Agreement.” Additional information regarding the Stockholder’s Agreement, including a copy of the Stockholder’s Agreement, can be found in our Current Report on Form 8-K filed with the SEC on June 29, 2017.

Our Board of Directors currently consists of five directors, all of whom are up for election at the 2018 annual meeting of stockholders. All of those director nominees, Messrs. Fuller, Hudson, Ringler, Spitzer and Tomnitz, if elected, will serve until the 2019 annual meeting of stockholders.

Director Elections Standard and Resignation Policy

Our amended and restated bylaws include a voting standard in uncontested elections of directors (as is the case for this annual meeting) of a majority of votes cast in the election. Under the majority of votes cast standard, a director nominee is elected if the number of votes cast “for” the nominee exceeds the number of votes cast “against” the nominee. In contested elections (that is, those in which the number of nominees exceeds the number of directors to be elected), the voting standard is a plurality of votes cast, which means that the individuals who receive the largest number of votes cast are elected as directors up to the maximum number of directors to be chosen at the meeting.

Our Board of Directors also adopted a director resignation policy, which is set forth in the corporate governance guidelines available at www.forestargroup.com under the “Investor Relations — Corporate Governance — Governance Documents” section of our website. This policy sets forth the procedures that will apply in the event that a director does not receive the requisite majority of votes cast “for” his or her election. In summary, an incumbent director nominee who fails to receive the required vote for election will, within five days after certification of the election results, tender his or her resignation to our Executive Chairman for consideration by the Nominating and Governance Committee of our Board of Directors. The Nominating and Governance Committee will consider the resignation and, within 45 days after the date of the stockholders meeting at which the election of directors occurred, will make a recommendation to the Board of Directors on whether to accept or reject the resignation. The Board of Directors will act on the Committee’s recommendation within 90 days after the date of the stockholders meeting. The director whose resignation is under consideration will not participate in the Committee or Board of Directors’ decision with respect to accepting or rejecting his or

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her resignation as director. If a resignation is not accepted by the Board of Directors, the director will continue to serve. If the failure of a nominee to be elected at the annual meeting results in a vacancy on the Board of Directors, that vacancy can be filled by action of the Board.

Following the Board’s decision on whether to accept or reject the resignation, we will publicly disclose the Board’s decision, together with an explanation of the process by which the decision was made and, if applicable, the Board’s reason(s) for rejecting the tendered resignation.

Director Qualifications

Our Nominating and Governance Committee is charged with assuring that the proper skills and experience are represented on our Board. Our corporate governance guidelines include a non-exclusive list of qualifications that should be considered in reviewing director candidates. The qualifications take into account business experience, independence, our business, geographic locations, diversity of backgrounds and skills, and other factors. We expect all our directors to possess the highest personal and professional ethics, integrity and values. We also expect our directors to be committed to the long-term interests of our stockholders as a whole as distinguished from the specific interest of any particular stockholder.

Nominees

Unless you specify otherwise on your proxy, the persons named as proxies in such proxy intend to vote for the election of the nominees listed below to serve as directors.

Messrs. Fuller, Hudson, Ringler, Spitzer and Tomnitz are standing for election as directors to serve until the 2019 annual meeting of stockholders, or until their replacements are duly elected and meet all requirements. All nominees are presently serving as directors. After review of their qualifications, the Nominating and Governance Committee recommended them as nominees to the full Board, and the full Board subsequently voted unanimously to recommend them to the stockholders as nominees. All of the nominees other than Mr. Hudson were designated by D.R. Horton, and Mr. Hudson was designated by mutual agreement of D.R. Horton and our pre-Merger Board, for nomination as directors pursuant to the Stockholder’s Agreement with D.R. Horton. For a description of the Stockholder’s Agreement, see the sections “Election of Directors — Stockholder’s Agreement” and “Certain Relationships and Related Party Transactions — Stockholder’s Agreement.”

We did not pay a fee to any third party to identify or evaluate or to assist in identifying or evaluating potential nominees.

Each of the nominees has consented to being named in this Proxy Statement and to serve if elected. If any nominee becomes unavailable to serve, however, the persons named as proxies in the enclosed form of proxy intend to vote the shares represented by the proxy for the election of such other person or persons as may be nominated or designated by management, unless they are directed by the proxy to do otherwise.

A brief summary of each director’s principal occupation, recent professional experience, certain specific qualifications considered by the Nominating and Governance Committee and the Board, and directorships at other public companies in the past five years, if any, is provided below.

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The Board of Directors Recommends a Vote “FOR” the Election of Messrs. Fuller,

Hudson, Ringler, Spitzer, and Tomnitz as Directors of Forestar.

How Nominees are Selected

Our Nominating and Governance Committee selects nominees on the basis of recognized achievements and their ability to bring various skills and experience to the deliberations of our Board, as described in more detail in the corporate governance guidelines available at www.forestargroup.com under the “Investor Relations — Corporate Governance — Governance Documents” section of our website. The corporate governance guidelines encourage board membership composed of diverse background skills and substantive pertinent experience, and diversity among the directors as a whole.

Our Board approves the nominees to be submitted to the stockholders for election as directors. Our Nominating and Governance Committee and our Board consider whether non-employee director nominees are independent as defined in the corporate governance listing standards of the New York Stock Exchange (“NYSE”) and whether they have a prohibited conflict of interest with our business.

Our Nominating and Governance Committee considers director candidates recommended by stockholders who are entitled to vote for the election of directors at the annual meeting of stockholders and who comply with the advance notice procedures for director nominations set forth in our amended and restated bylaws. These procedures require that notice of the director nomination be made in writing to our Corporate Secretary. The notice must be received at our executive offices not less than 75 days nor more than 100 days prior to the anniversary date of the immediately preceding annual meeting of stockholders. In the case of an annual meeting called for a date more than 50 days prior to such anniversary date, notice must be received not later than the close of business on the 10th day following the date on which notice of the annual meeting date is first mailed to stockholders or made public, whichever occurs first. In the case of a special meeting of stockholders at which directors are to be elected, notice must be received not later than the close of business on the 10^th day following the date on which notice of the special meeting date is first mailed to stockholders or made public, whichever occurs first. Recommendations by stockholders that are made in this manner will be evaluated in the same manner as recommendations for other candidates, which include taking into consideration the needs of the Board and the qualifications of the candidates. Our amended and restated bylaws require the notice of director nomination to include certain specified information regarding the nominating stockholder and the nominee.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Related Party Transaction Policy

We maintain a written policy and procedures for the review, approval or ratification of any related party transactions that we are required to report under this section of the Proxy Statement.

Under the related party transaction policy, any transaction, arrangement or relationship between us and a related party must be reviewed by the Nominating and Governance Committee, unless pre-approved under the policy. The policy deems the following transactions, arrangements or relationships to be pre-approved:

Under the policy, the Nominating and Governance Committee, in the course of review of a potentially material related party transaction, will consider, among other things, whether the transaction is in our best interest, whether the transaction is entered into on an arms-length basis, whether the transaction conforms to our code of business conduct and ethics and whether the transaction impacts a director’s independence under the NYSE listing standards. A related party transaction that has been approved or ratified by the independent members of our Board of Directors does not require approval or ratification by the Nominating and Governance Committee.

During the year ended December 31, 2017, there were no transactions that were required to be reported in this section of the Proxy Statement under Item 404(a) of Regulation S-K where the policy was not followed.

Stockholder’s Agreement

In connection with the Merger, we entered into a Stockholder’s Agreement with D.R. Horton that provides for certain board and board committee appointment rights and certain approval rights. Under the terms of the Stockholder’s Agreement and our Amended and Restated Certificate of Incorporation, immediately following the Merger, and during a period of 15 months following the Merger (the “Lock-Up Period”), our Board will have five directors, comprised of four individuals designated by D.R. Horton (which will include our Executive Chairman and at least two independent directors) and one individual designated by mutual agreement of us and D.R. Horton prior to the Merger (the “Legacy Director”) or his replacement. Thereafter, at all times when D.R. Horton and its affiliates beneficially own 20% or more of our voting securities, the Board will have five directors unless otherwise agreed in writing between us (as approved by a majority of our independent directors) and D.R. Horton, and D.R. Horton will have the right to designate a number of directors equal to the percentage of our voting securities beneficially owned by D.R. Horton and its affiliates multiplied by the total number of directors that we would have if there were no vacancies, rounded up to the nearest whole number (and in any event not less than one). We and D.R. Horton have also each agreed to use reasonable best efforts to cause at least three of the directors to be to be considered “independent” under the rules of the SEC and under applicable listing standards.

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In addition, at all times when D.R. Horton and its affiliates beneficially own 20% or more of our voting securities, no committee of the Board will have more than three members unless otherwise agreed in writing between us (as approved by a majority of our independent directors) and D.R. Horton, and each committee of the Board will include in its membership (i) a number of D.R. Horton designees equal to the percentage of our voting securities beneficially owned by D.R Horton and its affiliates multiplied by the total number of members that such committee would have if there were no vacancies on such committee, rounded up to the nearest whole number (and in any event not less than one) and (ii) at least one member not designated by D.R. Horton. In addition, at all times when D.R. Horton and its affiliates beneficially own 20% or more of our voting securities, the Board will maintain a Nominating and Governance Committee, and the Legacy Director will be a member of the Nominating and Governance Committee for so long as the Legacy Director serves on the Board. During the Lock-Up Period, the Nominating and Governance Committee will have three members, including the Legacy Director (as long as the Legacy Director is then on the Board) and at least one additional independent director.

On October 6, 2017, D.R. Horton and our Board, including the Legacy Director and each of the other members of our Board that are considered “independent” under the rules of the SEC and the NYSE (the “Independent Directors”), elected to waive the requirement that the Nominating and Governance Committee consist of three directors, set the size of each of our Nominating and Governance Committee, the Compensation Committee and the Audit Committee at four directors, and appointed each of the four Independent Directors, including the Legacy Director, as members of the Nominating and Governance Committee, the Compensation Committee and the Audit Committee.

Also under the Stockholder’s Agreement and our Amended and Restated Certificate of Incorporation, we must maintain an investment committee (which will not be considered a committee of the Board) (the “Investment Committee”), the members of which will be our officers or employees who are (A) experienced professionals in the land acquisition and development business or (B) the chief executive officer, the chief financial officer, the general counsel or the president of community development (or any person serving in an equivalent role). Our Executive Chairman will be a member of the Investment Committee at all times. The other members of the Investment Committee will be appointed by the Nominating and Governance Committee. The Investment Committee is vested with sole responsibility over investment decisions involving capital expenditures of $20,000,000 or less (each, an “Investment Committee Approval Transaction”). All decisions of the Investment Committee will require the approval of a majority of the members of the Investment Committee. Any investment decision that does not involve an Investment Committee Approval Transaction will be subject to approval by the Board (independent members).

For so long as D.R. Horton and its affiliates beneficially own 35% or more of our voting securities, we may not take any of the following actions without the prior written consent of D.R. Horton: (i) declare or make any extraordinary or in-kind dividend other than a dividend on a pro rata basis to all stockholders or a dividend to us or any of our wholly-owned subsidiaries; (ii) issue any new class of equity or voting securities; (iii) issue equity or equity-linked securities or voting securities (A) in the case of securities issued as employee compensation, constituting 1% or more of the then outstanding shares of our common stock in any calendar year or (B) in any other case, constituting 10% or more of the then-outstanding number of shares of our common stock; (iv) incur indebtedness above certain levels; (v) select, terminate or remove certain key officers or change their compensation arrangements; (vi) make or approve any fundamental change in our business of developing residential and mixed-use real estate; (vii) acquire assets or enter into mergers or similar acquisitions involving capital expenditures in excess of $20,000,000; (viii) effect or approve any voluntary liquidation, dissolution or winding-up or certain events of bankruptcy or insolvency; (ix) enter into any strategic alliance or commercial agreement of a nature similar to the Master Supply Agreement (as described below) with a person other than D.R. Horton; or (x) effect any election of a settlement of our 3.75% Convertible Senior Notes due 2020 in connection with an election to convert the notes by a holder thereof.

In addition, at all times when D.R. Horton and its affiliates beneficially own 35% or more of our voting securities, we may not take any of the following actions without approval of a majority of the independent directors who are not also affiliated with D.R. Horton: (i) enter into, amend, modify, terminate or approve any transaction between us, on one hand, and D.R. Horton or any of its affiliates, on the other hand, or enter into any

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waiver, consent or election thereunder (other than an Investment Committee Approval Transaction); (ii) amend, modify or terminate, or enter into any waiver, consent or election under, the Stockholder’s Agreement or enter into any merger or business combination with D.R. Horton or any of its affiliates; (iii) enter into any merger, business combination or similar transaction in which D.R Horton receives consideration for our common stock of greater value or in a different form than our other stockholders; or (iv) settle any claim between us and D.R Horton (other than an Investment Committee Approval Transaction).

For so long as D.R. Horton and its affiliates beneficially own 20% or more of our voting securities, we may not amend our or our subsidiaries’ organizational documents in any manner that could adversely affect the rights of D.R. Horton under the Stockholder’s Agreement. In addition, we may not amend our or our subsidiaries’ organizational documents in any manner that could adversely affect the rights of our other stockholders under the Stockholder’s Agreement.

D.R. Horton has agreed to certain lock-up and standstill provisions during the Lock-Up Period. During the Lock-Up Period, D.R. Horton generally may not transfer shares of our common stock, other than (i) transfers to our subsidiaries, (ii) transfers approved by a majority of our independent directors and (iii) transfers of up to one-third of the aggregate amount of shares of our common stock beneficially held by D.R. Horton and its subsidiaries as of immediately following the Merger in an offering that is not registered under the Securities Act of 1933, as amended, to transferees agreeing to be bound by the lock-up provisions in the Stockholder’s Agreement. In addition, during the Lock-Up Period, D.R. Horton and its affiliates generally may not (subject to customary exceptions) participate in any transactions that would result in D.R. Horton and its affiliates beneficially owning more than 80% of the voting power of our common stock, provided that D.R. Horton is permitted, under certain conditions, to make private proposals to the non-D.R. Horton affiliated directors on the Board. Any proposal by D.R. Horton to acquire all of the shares of our common stock must be (a) subject to review, evaluation and prior written approval of a majority of the independent directors, and (b) submitted for approval to our stockholders, with a nonwaivable condition that a majority of the voting power of the non-D.R. Horton stockholders approve the transaction.

Except in certain cases, D.R. Horton has a pre-emptive right (but not the obligation) to participate in any issuance of equity or other securities by us by purchasing up to D.R. Horton’s and its subsidiaries’ pro rata portion of such equity or other securities at the price and otherwise upon the same terms and conditions as offered to other investors.

The Stockholder’s Agreement provides for customary registration rights with respect to our common stock held by D.R. Horton, its affiliates and their permitted transferees. Pursuant to such registration rights, we have agreed to file, prior to expiration of the Lock-Up Period, and to use our reasonable best efforts to make and keep effective, a shelf registration statement permitting the resale of our common stock by D.R. Horton, its affiliates and their permitted transferees. In addition, after expiration of the Lock-Up Period, D.R. Horton has the right, subject to certain limitations, to require us to register our common stock held by D.R. Horton for resale. D.R. Horton also has piggyback registration rights in connection with offerings of our common stock by us or our other stockholders. The Stockholder’s Agreement also provides that D.R. Horton and its affiliates will not be prohibited from engaging in business opportunities independently of us unless the opportunity is offered to an individual who is both an officer or director of D.R. Horton or its affiliates and an officer or director of ours and the offer is made in writing to the individual in his or her capacity as an officer or director of us.

The Stockholder’s Agreement will terminate on the first day that D.R. Horton and its affiliates beneficially own less than 15% of our voting securities, provided that the provisions of the Stockholder’s Agreement relating to D.R. Horton’s registration rights, the waiver of business opportunities and certain customary provisions will survive the termination of the Stockholder’s Agreement.

Additional information regarding the Stockholder’s Agreement, including a copy of the Stockholder’s Agreement, can be found in our Current Report on Form 8-K filed with the SEC on June 29, 2017.

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Master Supply Agreement

In connection with the Merger, we entered into a Master Supply Agreement with D.R. Horton. The terms of the Master Supply Agreement, unless earlier terminated, continue until the earlier of (a) the date that D.R. Horton and its affiliates beneficially own less than 15% of our voting securities and (b) June 29, 2037.

Under the Master Supply Agreement, we will present to D.R. Horton all single-family residential lot development opportunities (subject to certain exceptions) that we desire to acquire and develop that have been approved or conditionally approved by the Investment Committee (a “Forestar Sourced Opportunity”); and D.R. Horton has the right, but not the obligation, to present us with lot development opportunities that D.R. Horton desires to acquire for development (if presented to us, a “D.R. Horton Sourced Opportunity”).

The following opportunities are excluded from Forestar Sourced Opportunities: (a) any opportunities, developments or ventures owned, under contract, the subject of a letter of intent or otherwise being pursued, by us at the time of the Merger; or (b) any opportunities presented to us by a third-party builder.

We and D.R. Horton will collaborate regarding all Forestar Sourced Opportunities and all D.R. Horton Sourced Opportunities, after considering current and future market conditions and dynamics. If we and D.R. Horton agree to pursue a Forestar Sourced Opportunity or a D.R. Horton Sourced Opportunity, such agreement will be evidenced by a mutually agreed upon written development plan prepared at the direction of the Investment Committee (a “Development Plan”), addressing, among other things, the number, size, layout and projected price of lots, phasing, timing, amenities and entitlements and are referred to as either a “Forestar Sourced Development” or a D.R. Horton Sourced Development,” as the case may be.

D.R. Horton or its affiliates have (a) a right of first offer (“ROFO”) to buy up to 50% of the lots in the first phase (and in any subsequent phase in which D.R. Horton purchased at least 25% of the lots in the previous phase) in each Forestar Sourced Development; and (b) the right to purchase up to 100% of the lots in each D.R. Horton Sourced Development, at the then current fair market price and terms per lot, as mutually agreed to by us and D.R. Horton. All lots in a Forestar Sourced Development in which a D.R. Horton affiliate participates as a buyer will be equitably allocated among D.R. Horton and any other builders in each phase taking into consideration the location, size and other attributes associated with the lots. The agreement evidencing the ROFO for the lots in the Forestar Sourced Development (the “ROFO Agreement”), and the purchase and sale agreement for the lots in the D.R. Horton Sourced Development (the “PSA”), will be negotiated, finalized and executed as a part of the Development Plan, and in all events the Development Plan will be finalized, and the ROFO Agreement will be negotiated, finalized and executed, prior to the expiration of the feasibility period in any contract to acquire a Forestar Sourced Development. D.R. Horton will assign to us on an “as-is”, “where-is basis” the contract to acquire a D.R. Horton Sourced Development after the finalization of the Development Plan and PSA for such D.R. Horton Sourced Development.

We, at our sole cost and expense, will perform and direct, through our employees, agents and contractors, all functions relative to diligence, entitlement, financing, planning, design and construction of all on-site and off-site improvements required for any development.

In addition to termination for breach or mutual agreement of the parties, we may terminate the Master Supply Agreement at any time that D.R. Horton and its affiliates beneficially own less than 25% of our voting securities.

Additional information regarding the Master Supply Agreement, including a copy of the Master Supply Agreement, can be found in our Current Report on Form 8-K filed with the SEC on June 29, 2017.

Shared Services Agreement

On October 6, 2017, we entered into a Shared Services Agreement with D.R. Horton pursuant to which D.R. Horton will provide to us certain administrative, compliance, operational and procurement services. No payments were made to D.R. Horton under the Shared Services Agreement in fiscal 2017. In fiscal 2018, pursuant to the services to be provided by D.R. Horton to Forestar under the Shared Services Agreement, we expect to pay to D.R. Horton approximately $100,000 per month on average.

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In addition to termination for breach or mutual agreement of the parties, the Shared Services Agreement shall terminate 30 calendar days after it is determined that D.R. Horton owns less than 20% of our fully diluted common stock.

Additional information regarding the Shared Services Agreement, including a copy of the Shared Services Agreement, can be found in our Current Report on Form 8-K filed with the SEC on October 10, 2017.

In addition, in the first quarter of 2018 we began leasing office space in Austin from D.R. Horton for $15,000 per month, the term of which is indefinite. This office lease is not part of the Shared Services Agreement.

Related Party Transactions with D.R. Horton

We had no related party transactions between January 1, 2017 and October 5, 2017, the closing date for the Merger, with D.R. Horton.

As a result of the Merger and D.R. Horton owning 75% of the common stock of Forestar, D.R. Horton is required to consolidate the Forestar financial statements in the D.R. Horton consolidated financial statements. In addition, to align the financial reporting periods of D.R. Horton and Forestar, in February 2018, the Board of Directors changed Forestar’s fiscal year end from December 31 to September 30.

Since the Merger on October 5, 2017, we have participated in or intend to participate in 21 separate real property transactions with D.R. Horton in which the aggregate transaction value of each transaction is greater than $120,000. Each of these real property transactions are the type contemplated by the Stockholder’s Agreement and Master Supply Agreement and relate to real property transactions that are in the normal course of business of both D.R. Horton and Forestar and are at market terms and pricing. Generally, these real property transactions between D.R. Horton and Forestar take place in several stages and the completion of the transactions will occur over several development phases with lot purchases occurring over periods ranging from several months to several years. The typical real property transaction involves D.R. Horton assigning its contractual rights to purchase land or lots to Forestar and Forestar then purchases the land or lots and develops the land, or has the land developed, on Forestar’s behalf, into finished residential lots. Thereafter, D.R. Horton and Forestar enter into a lot purchase agreement for D.R. Horton to purchase the residential lots from Forestar at negotiated market prices. Another typical real property transaction involves Forestar sourcing its own land transaction, developing the land into finished residential lots and selling such lots to D.R. Horton or a third party at negotiated market prices.

From October 6, 2017 and through March 27, 2018, Forestar and D.R. Horton have entered into, or propose to enter into, contracts for 21 real property transactions of the type described above in the ordinary course of our businesses. D.R. Horton has assigned or expects to assign its rights to purchase 19 of these 21 properties to Forestar. Forestar expects to reimburse D.R. Horton approximately $21.5 million for D.R. Horton’s previously paid earnest money and other due diligence costs related to these 19 properties. In addition, we anticipate that during the development phase of 16 of these transactions, we will owe to D.R. Horton approximately $4.5 million related to development and construction management services related to lots currently under contract. After the land is developed into finished residential lots, we expect to sell approximately 3,659 finished residential lots and undeveloped tracts to D.R. Horton for approximately $310 million in accordance with the purchase schedules in the applicable contracts. We expect the amount related to development and construction services will be netted against the lot sale proceeds we receive from D.R. Horton. D.R. Horton may acquire additional lots from us in the future development phases of these projects.

Of the 21 real property transactions referenced above, 10 are expected to result in $20 million or less in capital expenditures and were approved by the Investment Committee as set forth in the Forestar Certificate of Incorporation and the Stockholder’s Agreement. Also, each of these transactions was ratified by the Nominating and Governance Committee in accordance with the Forestar Related Party Transaction Policy. Two of the 21 projects in this category are legacy Forestar sourced real property projects and we expect the Investment Committee to approve, and the Nominating and Governance Committee to ratify, the sale of finished residential lots related to the two projects to D.R. Horton during fiscal 2018.

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Of the 21 real property transaction referenced above, 9 are expected to result in greater than $20 million in capital expenditures and were approved by the Investment Committee and approved by the independent members of Forestar’s Board of Directors as set forth in the Forestar Certificate of Incorporation and the Stockholder’s Agreement and in accordance with the Forestar Related Party Transaction Policy. Related party transactions approved by the independent members of our Board of Directors do not require separate approval by our Nominating and Governance Committee.

In fiscal 2018, D.R. Horton and Forestar also plan to enter into a contract where D.R. Horton assigns a land purchase contract to Forestar and Forestar will purchase the land, and Forestar will sell it back to D.R. Horton at a later date. For this transaction, D.R. Horton would pay to Forestar a fee of approximately $4 million at the completion of the transaction. This transaction was approved by the Investment Committee and approved by the independent members of the Board of Directors.

The real property transactions described in this “Certain Relationships and Related Party Transactions” section are usual and customary real property transactions for companies in the homebuilding and land development businesses. These real property transactions are discussed in this section because D.R. Horton owns 75% of the common stock of Forestar as a result of the Merger. The individual executive officers or directors of Forestar and D.R. Horton have no beneficial interest in these real property transactions other than in their oversight or employment capacity as officers or directors of their respective companies.

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BOARD MATTERS

Board Leadership Structure

Mr. Tomnitz serves as our Executive Chairman of the Board. Mr. Tomnitz was appointed as Executive Chairman on October 5, 2017 in connection with the consummation of the Merger. Mr. Tomnitz has significant experience serving in the real estate and homebuilding industry and as a public company CEO.

Our corporate governance guidelines state that our Board believes that separation of the offices of Executive Chairman and CEO is in the best interests of the Company and its stockholders at this time. We believe the separation of these positions is appropriate at this time. It allows our Executive Chairman to focus on overall strategy and vision while leading the Board and enabling Mr. Bartok, our CEO, to focus on running the company and affording us the benefits of Mr. Tomnitz’s Board leadership experience. However, should circumstances change in the future, the Board is free to choose its Executive Chairman in any way it determines is in the best interests of the Company and its stockholders in accordance with our certificate of incorporation or amended and restated bylaws.

Our Board performs a number of its functions through committees. All committee members including the chairmen of our Audit Committee, Compensation Committee and Nominating and Governance Committee are independent directors under NYSE listing standards. Each committee’s charter expressly provides that the committee has the sole discretion to retain, compensate, and terminate its advisors. The charters of our Audit Committee, Compensation Committee, and Nominating and Governance Committee are available at www.forestargroup.com under the “Investor Relations — Corporate Governance — Committees” section of our website. We will provide a copy of these documents, without charge, upon request to our Corporate Secretary at our principal executive office. Any changes to the committee charters will be reflected on our website.

Risk Oversight

The Board oversees our risk management processes and management is responsible for managing risks. The Board performs its risk oversight role by using several different levels of review. Our CEO reports on significant risks to the Board at least annually, and at additional times as may be necessary or appropriate. In addition, management reports on and the Board reviews the risks associated with our strategic plan periodically throughout the year as part of the Board’s consideration of our strategic direction.

All of our current Board members other than Mr. Tomnitz, our Executive Chairman (and other Board members who served during 2017 except for Mr. Weber, our former CEO), are classified as independent under the NYSE listing standards. We believe that the number of independent, experienced directors that make up our Board, along with oversight of the Board by the Executive Chairman, benefits our Company and our stockholders.

Each of the Board’s Committees also oversees the management of risks that fall within the Committee’s areas of responsibility. In performing this function, each Committee has full access to management, as well as the ability to engage advisors.

We believe this division of responsibilities is the most effective approach for addressing the risks facing our Company and that our Board composition and leadership structure support this approach.

Board Committees and Stockholder’s Agreement

At all times when D.R. Horton and its affiliates beneficially own 20% or more of our voting securities, no committee of the Board will have more than three members unless otherwise agreed in writing between us (as approved by a majority of our independent directors) and D.R. Horton, and each committee of the Board will include in its membership (i) a number of D.R. Horton designees equal to the percentage of our voting securities beneficially owned by D.R Horton and its affiliates multiplied by the total number of members that such committee would have if there were no vacancies on such committee, rounded up to the nearest whole number (and in any event not less than one) and (ii) at least one member not designated by D.R. Horton. In addition, at all

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times when D.R. Horton and its affiliates beneficially own 20% or more of our voting securities, the Board will maintain a Nominating and Governance Committee, and the Legacy Director will be a member of the Nominating and Governance committee for so long as the Legacy Director serves on the Board. During the Lock-Up Period, the Nominating and Governance Committee will have three members, including the Legacy Director (as long as the Legacy Director is then on the Board) and at least one additional independent director.

On October 6, 2017, D.R. Horton and our Board, including the Legacy Director and each of the other members of our Board that are considered “independent” under the rules of the SEC and the NYSE (the “Independent Directors”), elected to waive the requirement that the Nominating and Governance Committee consist of three directors, set the size of each of our Nominating and Governance Committee, the Compensation Committee and the Audit Committee at four directors, and appointed each of the four Independent Directors, including the Legacy Director, as members of the Nominating and Governance Committee, the Compensation Committee and the Audit Committee.

Additional information regarding the Stockholder’s Agreement, including a copy of the Stockholder’s Agreement, can be found in our Current Report on Form 8-K filed with the SEC on June 29, 2017.

Audit Committee

The Audit Committee assists the Board in its oversight of:

In addition, the Audit Committee prepares the report that SEC rules require be included in the annual proxy statement. The Audit Committee has the sole authority to retain, compensate, and terminate the independent registered public accounting firm. Our Board of Directors has determined that there is at least one audit committee financial expert serving on the Audit Committee, Mr. Spitzer, who is an independent director. In addition, our Board of Directors has determined, in its business judgment, that all members of the Audit Committee are financially literate and independent as defined in the NYSE corporate governance standards. During 2017 until the closing of the Merger on October 5, 2017, the members of the Audit Committee were Messrs. Rubright (Chair), Hudson, Powers (until his resignation effective May 9, 2017), and Squires. Starting on October 5, 2017, effective upon the closing of the Merger, the members of the Audit Committee were Messrs. Spitzer (Chair), Fuller, Hudson and Ringler. The Audit Committee met six times in 2017.

Compensation Committee

The Compensation Committee is responsible for:

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The Compensation Committee considers the impact of our executive compensation programs, and the incentives created by the compensation awards that it administers, on our risk profile. The Compensation Committee reviews and considers, among other things, the incentives that our programs create and the factors that may reduce the likelihood of excessive risk taking. The Compensation Committee reports regularly to the full Board. We do not believe that the risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on us.

Such responsibilities may not be delegated to any persons who are not members of the Compensation Committee. The Executive Chairman recommends executive compensation amounts and programs to the Compensation Committee. The Compensation Committee did not engage a compensation consultant in 2017.

During 2017 until the closing of the Merger on October 5, 2017, the members of the Compensation Committee were Messrs. Silvers (Chair), Rubright and Smith. Starting on October 5, 2017, effective upon the closing of the Merger, the members of the Compensation Committee were Messrs. Fuller (Chair), Hudson, Ringler and Spitzer. Our Board of Directors has determined, in its business judgment, that all members of the Compensation Committee are independent as defined in the NYSE corporate governance standards. The Compensation Committee met eight times in 2017.

Compensation Committee Interlocks and Insider Participation

There are no Compensation Committee interlocks among the members of our Board and no member of the Compensation Committee has a transaction reported under “Certain Relationships and Related Party Transactions.”

Nominating and Governance Committee

The Nominating and Governance Committee is responsible for:

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During 2017 until the closing of the Merger on October 5, 2017, the members of the Nominating and Governance Committee were Messrs. Smith (Chair), Hudson, Powers (until his resignation effective May 9, 2017) and Silvers. Starting on October 5, 2017, effective upon the closing of the Merger, the members of the Nominating and Governance Committee were Messrs. Ringler (Chair), Fuller, Hudson, and Spitzer. Our Board of Directors has determined, in its business judgment, that all members of the Nominating and Governance Committee are independent as such term is defined in the NYSE corporate governance standards. The Nominating and Governance Committee met four times in 2017.

Executive Committee

The Executive Committee may exercise all the authority of the Board of Directors in the management of our business and affairs except:

During 2017 until the closing of the Merger on October 5, 2017, members of the Executive Committee were Messrs. Rubright (Chair), Silvers and Smith. Starting on October 5, 2017, effective upon the closing of the Merger, the sole member of the Executive Committee was Mr. Tomnitz (Chair) until October 31, 2017, when Mr. Hudson and Mr. Ringler were also appointed to the Executive Committee. The Executive Committee did not meet in 2017.

Director Independence

Our Board has adopted corporate governance guidelines that set forth our director independence standards, which are discussed below. Our corporate governance guidelines are posted at www.forestargroup.com under the “Investor Relations — Corporate Governance — Governance Documents” section of our website. In accordance with our corporate governance guidelines and NYSE rules, at least a majority of our directors are independent.

All directors other than Mr. Tomnitz, our Executive Chairman, satisfy our director independence standards. Mr. Tomnitz does not meet our independence standards because he is an executive officer.

The Board defines independence as meeting the requirements to be considered independent directors under current NYSE rules. The Board has established the following additional guidelines to assist it in determining director independence:

There were no material transactions or relationships between us and any of our continuing independent directors during 2017.

There is no family relationship between any of the nominees, continuing directors and executive officers of the Company.

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Board Meetings

Our Board typically meets at least four times a year. Our Board met 24 times in 2017. Each incumbent director attended at least 75% of Board meetings and committee meetings held by all committees on which he or she served (held during the period he or she served).

Our Board holds regularly scheduled executive sessions with only non-management directors present. Executive sessions were held at five of the Board meetings in 2017. At least once each year, the Board will have an executive session with only independent non-management directors present. The Chair of the Nominating and Governance Committee serves as presiding director to lead these executive sessions of the Board.

Other Corporate Governance Matters

Under our corporate governance guidelines, a director is deemed to have tendered his or her resignation at the next regularly scheduled meeting of the Nominating and Governance Committee in the event of a change in job status from the status held at the time of election to our Board. The Nominating and Governance Committee will review whether the new occupation or retirement of the director is consistent with the needs and composition of our Board and recommend action to our Board based on such review. Also under our corporate governance guidelines, non-employee directors may not serve on the boards of directors of more than three public companies. The Executive Chairman of the Board and the Chair of the Nominating and Governance Committee must be consulted by existing directors prior to joining another board of directors. The Executive Chairman of the Board and the Chair of the Nominating and Governance Committee will together assess whether the new membership would present a conflict or otherwise compromise the ability of that director to dedicate the time necessary to serve on our Board.

We expect all of our Board members to attend our annual meeting of stockholders, but from time to time other commitments may prevent certain Board members from attending. All Board members attended our 2017 annual meeting of stockholders except Mr. Powers, whose resignation was effective on the date of the 2017 annual meeting of stockholders.

Non-employee directors must retire no later than the annual stockholders meeting following their 77th birthday unless the remaining non-employee directors determine that it would be in the best interest of the Company and our stockholders under the particular circumstances existing at the time for an exception to this policy to be granted. Employee directors must resign from the Board at the time they retire or otherwise terminate employment with us, but no later than their 77th birthday, unless otherwise determined by the Board.

Policies on Business Conduct and Ethics

All our directors, officers and employees are required to abide by our Standards of Business Conduct and Ethics. This code covers all areas of professional conduct, including conflicts of interest, unfair or unethical use of corporate opportunities, protection of confidential information, compliance with all applicable laws and regulations, and oversight and compliance. Our CEO and CFO (who is also our Principal Accounting Officer) also are required to abide by our Code of Ethics for Senior Financial Officers. The Standards of Business Conduct and Ethics and Code of Ethics for Senior Financial Officers are available at www.forestargroup.com under the “Investor Relations — Corporate Governance — Governance Documents” section of our website. We will provide a copy of these documents without charge to any stockholder upon request to our Corporate Secretary at our principal executive offices. Any future amendments to either of these codes, and any waiver of the Code of Ethics for Senior Financial Officers and of certain provisions of the Standards of Business Conduct and Ethics for directors or executive officers, will be disclosed on our website promptly following the amendment or waiver.

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Communications with Directors

Stockholders and other interested parties may communicate with our Board by forwarding written comments to the Chairman of the Nominating and Governance Committee with a copy to our Corporate Compliance Officer to the following:

Rick Ringler, Nominating and Governance Committee Chair

Forestar Group Inc.

10700 Pecan Park Blvd., Suite 150

Austin, Texas 78750

Attention: Board Communications

Copy to:

Corporate Compliance Officer

Forestar Group Inc.

10700 Pecan Park Blvd., Suite 150

Austin, Texas 78750

Attention: Board Communications

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DIRECTOR COMPENSATION

Our director compensation program is designed in recognition of the time commitment and preparations required for directors to fulfill their responsibilities, to align director compensation with the long-term interests of our stockholders, and to assist in recruiting high-caliber directors.

Director Fee Schedule – Pre-Merger

Prior to completion of the Merger, the director fee schedule was as follows:

In addition to the above fees, when a new director was appointed or elected, the director received a stock option grant to acquire 20,000 shares of our common stock, vesting 6,500 options on the first anniversary of the date of grant, 6,500 options on the second anniversary of the date of grant, and 7,000 options on the third anniversary of the date of grant. The option term was ten years.

Mr. Weber did not receive a fee for service on our Board other than his compensation as an employee.

Director Fee Schedule – Post-Merger

After completion of the Merger, the director fee schedule was revised to be as follows:

The above annual fees are prorated and paid quarterly. In addition to the above fees, when a new director is appointed or elected, the director receives a restricted stock unit grant of 6,000 shares of our common stock, vesting in three equal annual installments on each of the first three anniversaries of the grant date.

Mr. Tomnitz does not receive a fee for service on our Board other than his compensation as Executive Chairman. Directors are reimbursed for expenses incurred in attending Board and committee meetings, including those for travel, food and lodging.

We do not have any program, plan or practice to time option grants to our directors in coordination with the release of material non-public information. We do not time our release of material non-public information for the purpose of affecting the value of director compensation.

Fee Deferral Plan

A director fee deferral plan was in effect through September 30, 2017. Thereafter, the director fee deferral plan was eliminated.

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Prior to elimination of the director fee deferral plan, instead of immediate payment of director fees in cash, directors could defer the fees into restricted stock units, payable at retirement in shares of our common stock or cash, as determined by our Board of Directors at the time of grant. The aggregate amount deferred into restricted stock units would equal 1.5 times the amount of cash fees deferred. The number of restricted stock units was determined by dividing the aggregate deferred amount by the closing price of our common stock on the date deferred and rounding down to the nearest whole unit. Restricted stock units were vested when granted. Dividend equivalents would be credited as additional restricted stock units if and when paid to stockholders. At retirement, a director would be paid, as determined by our Board of Directors at the time of grant, either in cash equal to the number of restricted stock units credited to his or her account multiplied by the then current closing price of our common stock or a number of shares of our common stock equal to the number of restricted stock units credited to his or her account.

If a director chose cash payment on a current basis instead of deferring his or her fees, the director would not receive a match with respect to such fees. The directors’ fee deferral plan provided for accelerating payment in the event the director’s service terminates due to a change in control. All such deferred fees were settled in connection with the Merger.

Annual Restricted Stock Unit Grant

An annual restricted stock unit grant was in effect prior to the Merger. After completion of the Merger, the annual restricted stock unit grant was eliminated.

Prior to the Merger, on the date of the first regularly-scheduled Board meeting each year, each non-employee director received a number of restricted stock units determined by dividing the dollar amount of the annual restricted stock unit grant by the closing price of our common stock on such date, rounded down to the nearest whole unit. 25% of the restricted stock units were vested when granted and 25% were vested at each subsequent quarterly Board meeting. Unvested restricted stock units did not accelerate upon a change in control, and vested restricted stock units were payable at retirement in shares of our common stock or cash, as determined by our Board of Directors on or before the grant date.

Insurance and Indemnification

All directors are covered under our director and officer liability insurance policies for claims alleged in connection with their service as a director. We have entered into indemnification agreements with each of our directors agreeing to indemnify them to the fullest extent permitted by law for claims alleged in connection with their service as a director.

2017 Director Compensation

The following table presents compensation earned by non-employee directors for services rendered in 2017 as calculated in accordance with SEC rules.

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Options received under our pre-Merger director compensation program were settled in connection with the Merger. The values from acceleration of these awards are as follows:

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Overview

On October 5, 2017, we completed the Merger and, as a result, D.R. Horton acquired approximately 75% of our common stock. At that time, all of the existing Board members other than Mr. Hudson resigned and four new Board members, including Mr. Tomnitz, were appointed to the Board pursuant to the terms of the Stockholder’s Agreement with D.R. Horton. In addition, Mr. Weber resigned as CEO effective December 28, 2017. Mr. Bartok was appointed as CEO effective December 29, 2017. Substantial portions of the 2017 executive compensation program remained in place and, in light of the changes described above, our Compensation Committee and Board are reviewing and assessing the objectives and elements of our executive compensation program for 2018 and beyond. Thus, the discussion in this Compensation Discussion and Analysis addresses 2017 executive compensation both up to the date of the Merger and the post-Merger decisions made in regard to 2017 performance.

Pre-Merger: Our officers who were executive officers in fiscal 2017 were as follows:

Post-Merger: Our officers who served as executive officers for the remaining portion of fiscal 2017, and who continue to serve in such roles in fiscal 2018, are as follows:

As indicated from the above, our three executive officers for fiscal 2018 will be Mr. Tomnitz, Mr. Bartok and Mr. Jehl.

We have gone through significant changes in fiscal 2017 as a result of the Merger with D.R. Horton: a change in the structure of our Board of Directors and its committees, including the Compensation Committee; and capital structure changes and changes in assets resulting from a strategic sale of a significant portion of the our legacy assets in February 2018.

This Compensation Discussion and Analysis should be read in light of the compensation program awarded by the Compensation Committee pre-Merger and the compensation program awarded by the Compensation Committee post-Merger.

Pre-Merger: In fiscal 2017, pre-Merger, our executive officers focused on reducing costs across our entire organization, selling non-core assets, reducing our outstanding debt and reviewing our portfolio of assets and capital allocation to maximize shareholder value.

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Post-Merger: In fiscal 2017, post-Merger, the new and continuing executive officers shifted their strategic focus to grow our core community development business through the strategic relationship to supply finished lots to D.R. Horton at market prices under the Master Supply Agreement. Under the terms of the Master Supply Agreement, both companies will proactively identify land development opportunities to expand our portfolio of assets. As our controlling shareholder, D.R. Horton has significant influence in guiding our strategic direction and operations.

Advisory Vote

At our 2017 annual meeting of stockholders, approximately 79% of votes cast in our advisory vote on executive compensation were in favor of the proposal. The Compensation Committee will continue to consider the results of stockholder advisory votes on executive compensation when making future decisions. In addition, in our advisory vote on the frequency of future advisory votes on executive compensation, our stockholders voted in favor of an annual advisory vote on executive compensation. Our Board of Directors has determined that advisory votes on executive compensation should be held annually.

Compensation Philosophy and Objectives

Our executive compensation program is designed to attract, retain, and motivate key executives to maximize value realization, performance and long-term stockholder value. We are guided by the following principles in determining the form and amount of executive compensation:

Elements of our Compensation Program

In fiscal 2017, and pre-Merger, the elements of our compensation program were as follows:

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In fiscal 2018, the Compensation Committee continued to believe the above compensation elements remain important to executive compensation. However, in fiscal 2018, the Compensation Committee determined to use restricted stock units as the primary equity incentive, if the Forestar stockholders approve the new 2018 Stock Incentive Plan and did not enter into any new change in control agreements for the new executive officers post-Merger.

Each element of compensation is evaluated independently to determine whether in our Compensation Committee’s judgment it is competitive within our segment of the real estate industry, considering both public and private competitors. Our Compensation Committee considers the compensation structures and opportunities of private competitors because we must compete against these companies for talent. Our Compensation Committee maintains a balance among the elements of compensation that ties a significant portion of compensation to performance. Our Compensation Committee also uses tally sheets that show all elements of compensation as a total. Although our Compensation Committee does not establish specific preset allocation formulas to determine the proportion of each element in relation to the other elements, it seeks to maintain a balance among the different elements below. From year to year, the Compensation Committee may also choose to award all or only certain elements of compensation to an NEO.

Base Salaries

Base salaries are determined based on the executive’s responsibilities, performance, experience, and the Compensation Committee’s judgment regarding competitive requirements and internal equity. No specific formula is applied to determine the weight of each factor. In reviewing the salaries of executives, the Compensation Committee from time to time reviews information from publicly-available data regarding the peer group companies discussed below. Our Compensation Committee may consider increases in the salaries of our executives based on increased responsibilities, realignment with market levels, or other factors in addition to the factors described above. Post-Merger, the annualized base salaries of our NEOs are set forth in the following table.

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Mr. Tomnitz was appointed as Executive Chairman of the Board effective immediately following the Merger, with an annual base salary of $300,000. The Board of Directors determined that it was in our best interest to have the leadership, expertise and experience of Mr. Tomnitz to help implement D.R. Horton’s strategic plan for our company.

Mr. Bartok was appointed as CEO on December 29, 2017 at an annual base salary of $300,000. Mr. Bartok was appointed to this role in connection with Mr. Weber’s resignation as CEO effective December 28, 2017.

Mr. Jehl’s current base salary is $325,000 for fiscal 2018. In fiscal 2017, pre-Merger, Mr. Jehl’s base salary was increased to reflect his continued development as CFO and to bring his base salary more in line with our peer group CFOs. Our Compensation Committee determined the salary adjustment amounts based on its discretion and on the recommendation of our CEO, pre-Merger, Mr. Weber. Mr. Jehl’s base salary adjustment was as follows:

Annual Incentive Bonuses

Pre-Merger: In 2017, pre-Merger, our Compensation Committee initially selected return on equity (“ROE”) and achievement of key initiatives as the primary performance measures for determining annual incentive bonuses. The ROE portion of the incentive bonus would represent 65% of the bonus opportunity. This portion of the bonus would be based on a sliding scale if ROE falls within a certain range of percentages determined by our Compensation Committee. The key initiatives portion of the incentive bonus would represent 35% of the bonus opportunity. Key initiatives would include (1) exiting non-core assets such as mineral interests, multifamily projects, undeveloped land and water interests, (2) growing our core community development business, including purchasing property to increase our lot development pipeline and increasing year-over-year unit sales, and (3) increasing year-over-year margins on community development sales. The Compensation Committee would use its judgment to determine the extent to which key initiatives were accomplished.

Post-Merger (October 6, 2017 through December 31, 2017): In light of the significant changes in business strategy and initiatives following the Merger, for the remaining period in fiscal 2017 (October 6, 2017 through December 31, 2017) the Compensation Committee elected not to base its bonus determinations on ROE and instead elected to determine annual incentive bonuses in its discretion, and for Messrs. Jehl and Quinley, based on the recommendations of Mr. Tomnitz to the Compensation Committee, taking into account the operation of our company pre-Merger, execution of key initiatives, finalizing the Merger and our new strategic direction post-Merger, as follows:

Factors considered include:

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Because Mr. Bartok was appointed as CEO just a few days prior to the end of 2017. The Compensation Committee did not award him an annual incentive bonus for 2017.

Our Compensation Committee may, in its discretion, award cash bonuses during the year or as part of the annual bonus awards as a result of extraordinary performance. In addition, our Compensation Committee may elect to pay “sign-on” bonuses and may elect to establish other measures to determine annual bonus amounts for purposes of recruiting a new executive. No special or sign-on bonuses were awarded to NEOs in 2017.

Fiscal 2018 (January 1, 2018 through September 30, 2018): In February 2018, the Board of Directors changed Forestar’s fiscal year-end from December 31 to September 30. As a result, Forestar’s fiscal year and bonus period will be the period from January 1, 2018 through September 30, 2018, resulting in a nine-month reporting and bonus period. For fiscal 2018, the Compensation Committee approved discretionary annual incentive cash bonus opportunities for Mr. Tomnitz, Mr. Bartok and Mr. Jehl as set forth below. The Compensation Committee may pay, on a pro-rata basis, the discretionary bonuses on a quarterly basis.

The Compensation Committee may consider several factors in determining discretionary bonuses for the executive officers, including but not limited to:

We believe that because of the restructuring that has occurred since the Merger, our executive officers, Mr. Tomnitz, Mr. Bartok and Mr. Jehl, will all be involved in all aspects of our business strategy, including but not limited to the items listed above. Our Board of Directors and Compensation Committee will continue to monitor and evaluate these factors.

Long-Term Incentive Awards

Our 2007 Stock Incentive Plan gave us the ability to provide our eligible employees, including each of our NEOs, grants of compensation awards based on our shares of stock. Our equity-based incentive awards include stock options, stock appreciation rights, market-leveraged stock units, performance stock units, restricted stock, and restricted stock units. Our Compensation Committee grants annual equity-based long-term incentive awards and may grant equity-based awards as a portion of the annual incentive program. Our Compensation Committee typically makes equity-based long-term incentive award grants in February of each year to further align interests of the executives with the interests of our stockholders and to remain competitive with market practices, support executive recruitment and retention, and establish internal pay equity among executives. Our Compensation Committee may, in its discretion, grant equity-based awards during the year as a result of extraordinary performance or the assumption of new responsibilities or to establish additional incentives in light of significant company events or developments.

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In making decisions regarding annual equity-based awards, our Compensation Committee uses tally sheets to consider previous grants, value and experience the executive brings to a role, relative responsibilities of the executive, and the business segment in determining sizes of awards. In the case of a new key executive, or an executive assuming new responsibilities, an initial grant may be made above usual annual targeted levels. The amounts of equity-based awards may be determined based on input from a compensation consultant regarding market practices, recommendations of the Executive Chairman or the CEO (except for the CEO’s awards, whose recommendations are made by the Executive Chairman), and the judgment of our Compensation Committee. The dollar value of the awards may be below, at or above the mid-range of what other comparable companies may offer in any given year. Our Compensation Committee may also consider internal pay equity for equity awards among executives.

The equity-based awards generally have the following terms:

We use long-term incentive awards in order to provide strong alignment with stockholders and ensure that executives are rewarded for increasing stockholder value. Given the unique combination of our businesses and the long-term nature of many of our investments, it is inherently difficult to set long-term financial performance goals. Accordingly, our Compensation Committee has determined that restricted stock units, performance stock units, market-leveraged stock units and stock options are an appropriate performance-based vehicle for a significant portion of long-term incentive value. Long-term incentive value awarded each year considers both company and individual performance with additional consideration for total outstanding equity opportunity for each executive and annual stockholder dilution.

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The Compensation Committee did not award any equity-based long-term incentive awards to Messrs. Weber, Jehl or Quinley in 2017 because throughout a substantial portion of the year the Board and its financial advisor were actively engaged in activities that the Compensation Committee believed could reasonably lead to a sale or merger of the company or other disposition of substantially all its assets in 2017.

Pre-Merger equity-based long-term incentive awards outstanding at the time of the Merger were settled for all holders, including our named executive officers, in connection with the merger transaction. The values from acceleration of these awards in connection with the Merger are as follows:

In order to ensure that our NEOs would continue to be provided with long-term incentive to close the merger transaction and during the initial transitional years thereafter, in 2017 the Compensation Committee awarded long-term incentive in the form of deferred cash, as follows:

These deferred cash awards provide for payment in three equal annual installments conditioned upon the continued employment of the officer except that the first installment was payable upon the closing of the merger transaction if it occurred earlier than the first annual installment payment date. In connection with the merger closing, Messrs. Weber, Jehl and Quinley each received one-third of their respective deferred cash awards during 2017. These amounts are reflected in the Bonus column of the Summary Compensation table on page 40. Any unvested portion of these awards will be forfeited upon separation from service for any reason. The balance of Mr. Weber’s award was forfeited upon his resignation as CEO effective December 28, 2017.

The Compensation Committee granted Mr. Tomnitz 12,000 restricted stock units as a result of his appointment as Executive Chairman and pursuant to Mr. Bartok’s employment offer, the Board agreed to grant Mr. Bartok 12,000 restricted stock units if our stockholders approve the new 2018 Stock Incentive Plan.

On March 21, 2018, our Board approved the adoption of the 2018 Stock Incentive Plan (the “2018 Stock Plan”) and recommended to the stockholders that the 2018 Stock Plan be approved. For more information on the 2018 Stock Plan, see the section on “Proposal to Approve the Forestar 2018 Stock Incentive Plan.”

Insider Trading Policy

Under the terms of our insider trading policy, the NEOs may not trade in options, warrants, puts, calls or similar hedging instruments, may not sell our securities “short,” and may not pledge or hold our securities in margin accounts.

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Other Compensation and Benefits

Qualified Retirement Benefits

We offer a tax-qualified defined contribution retirement plan to our employees in which our NEOs are eligible to participate. Our defined contribution retirement plan, which we also refer to as our 401(k) plan, has two components: (a) employee contributions with company match, and (b) company retirement contributions. Our 401(k) plan does not grant extra years of credited service to executives. Extra years of credited service would be granted only under our change in control agreements, but not for any other reason.

Our 401(k) plan allows us to match an employee’s contribution subject to an annual maximum limited by IRS rules. The match is vested 100% after two years of employment.

In addition, we make a supplemental retirement contribution equal to 3.5% of the employee’s compensation. The retirement contribution is vested after two years of employment. Employees are offered a wide range of investment choices under the plan for their payroll contributions, and our match and retirement contributions are invested proportionally in the same funds selected by the employees for their own payroll contributions.

Supplemental Executive Retirement Plan (SERP)

The Internal Revenue Code limits the amount of compensation that can be used in calculations under a tax-qualified defined contribution retirement plan such as our 401(k) plan. To provide our executives with a continuing ability to save for their retirement, we credit under the SERP an amount equal to 3.5% of the executive’s compensation in excess of this limit (earnings of $270,000 in 2017) plus a return based on Applicable Federal Rate as published by the Internal Revenue Service. The retirement contribution is vested after two years of employment. The SERP, which is a non-qualified defined contribution plan, is unfunded. The retirement benefit, to the extent vested upon termination of employment, will be paid in lump sum as soon as practicable after such termination. Any unvested portion would be forfeited.

Umbrella Liability Insurance

All employees at the vice president level and above, including our NEOs, are provided with a $3 million umbrella liability insurance policy, the value of which is taxable to the recipients. We do not plan to renew the employee umbrella liability insurance policies following their 2018 expiration.

Health and Welfare Benefits

We offer the same health and welfare benefits to all full-time employees, including our NEOs. These benefits include medical benefits, dental benefits, vision benefits, life insurance, salary continuation for short-term disability, long-term disability insurance, accidental death and dismemberment insurance, dependent care spending account, health care spending account, health savings account and other similar benefits.

Employment Agreement

Except for Mr. Weber, who resigned as CEO on December 28, 2017, none of our NEOs has an employment agreement. For a description of Mr. Weber’s employment agreement, see the Narrative to Summary Compensation Table, CEO Pay Ratio and Grants of Plan-Based Awards Tables section beginning on page 43 of this Proxy Statement. Occasionally we may sign a letter agreement with a new executive upon hiring, but generally such an agreement does not cover more than the first year’s pay and bonus, and confirmation of eligibility to participate in our long-term incentive program.

Change in Control Agreements

All of the NEOs (other than Mr. Tomnitz and Mr. Bartok) have change in control/severance agreements. For a description of the terms of these change in control/severance agreements, see the “Potential Payments Upon Termination or Change in Control” section beginning on page 48 of this Proxy Statement. We believe that the

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change in control/severance agreements help us to attract and retain our executives by reducing the personal uncertainty and anxiety that arises from the possibility of a future business combination. During a potential change in control, we would not want executives leaving to pursue other employment out of concern for the security of their jobs or being unable to concentrate on their work. To enable executives to focus on the best interest of our stockholders, we offer change in control agreements that generally provide severance benefits to executives whose employment terminates as a result of a change in control.

Perquisites

We generally provide minimal perquisites to our executives. Please see the Summary Compensation Table on page 40 for a description of 2017 perquisites.

Clawback Policy

If an executive leaves under circumstances that call into question whether any compensation amounts paid to him or her were validly earned, we would pursue any legal rights we deemed appropriate under the circumstances.

Oversight of Executive Compensation

Compensation Committee

Our Compensation Committee oversees executive compensation. Our Compensation Committee is composed entirely of independent, outside directors and establishes and administers our compensation programs and philosophies. Our Executive Chairman (or, before the Merger, our CEO) works closely with our Compensation Committee and recommends executive compensation amounts, except that our Executive Chairman (or, before the Merger, our CEO) does not participate in discussions regarding his own compensation. Our Executive Chairman (or, before the Merger, our CEO) consults with the other executive officers about compensation amounts for executives and other employees who report to them. Our Compensation Committee will also consider the results of stockholder advisory votes on executive compensation. Our Compensation Committee has final approval of all compensation amounts or formulas applicable to benefit plans in which executive officers participate.

Our Compensation Committee also:

In addition, a retirement plan investment committee oversees 401(k) plan fund choices. This investment committee reports annually to the Compensation Committee.

Competitive Pay Analysis and Peer Group

We employ several methods to evaluate our executive compensation practices relative to those in other companies. Our Compensation Committee, either alone or with the assistance of a compensation consultant, may

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conduct an analysis of the NEOs to assist with setting compensation for the NEOs. For further comparison, we evaluate the base salary, annual incentive bonus awards, and long-term incentives provided to the NEOs of the companies in our peer group, although we do not target our pay toward any particular peer group benchmark.

Our 2017 public company compensation peer group included a range of companies with operations in real estate development. In determining our 2017 compensation peer group, we considered 17 public company peers and excluded the seven companies with the highest total compensation. The 2017 compensation peer group is:

We have a unique combination of businesses and assets as compared with other publicly-traded companies so our Compensation Committee recognizes the limitations inherent within public company peer comparisons and utilizes its own judgment in making compensation decisions.

Compensation Consultant

Our Compensation Committee may engage a compensation consultant to, among other things, provide market and other specific information on executive pay. The compensation consultant may also attend our Compensation Committee meetings on request of the Compensation Committee. Our Compensation Committee periodically may meet in executive session with the compensation consultant. Our Compensation Committee did not engage a compensation consultant to provide advice about proposed 2017 executive compensation programs and amounts.

No compensation consultant or its affiliates provided additional services to us in excess of $120,000 during 2017.

Tally Sheets

Our Compensation Committee reviews tally sheets for each of the NEOs for compensation each year. These tally sheets list the executive’s salary, proposed bonus and stock awards, and the 401(k) matching contribution, retirement, health and welfare benefits.

Evaluation of Executive Chairman’s and CEO’s Performance

Our Compensation Committee facilitates a process for each member of our Board (excluding our Executive Chairman or, before the Merger, our CEO) to provide formal feedback regarding our Executive Chairman’s (or, before the Merger, our CEO’s) performance, to be discussed with the full Board (excluding our Executive Chairman or, before the Merger, our CEO) in executive session. Factors evaluated may include ROE, segment performance, and other financial and non-financial performance measures and objectives, including leadership, ethics, key initiatives, strategic planning, financial results, succession planning, human resources, communications, external relations, and board relations. Our independent directors determine Executive Chairman (or, before the Merger, CEO) pay with recommendations from the Compensation Committee.

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Compensation Oversight Governance Practices

Our governance practices divide responsibility for compensation oversight into three levels:

Equity Award Governance Practices

Our general practice is to make equity-based award grants annually. From time to time, we may grant equity-based awards to our executive officers outside the annual award process, such as in connection with the hiring of a new executive, for retention purposes, to reward exemplary performance, or for promotional recognition. The Executive Chairman (or, before the Merger, the CEO) provides initial award recommendations to our Compensation Committee for approval.

We do not have any program, plan or practice to time option grants or other stock-based awards in coordination with the release of material non-public information nor do we time the release of material non-public information for the purpose of affecting the value of executive compensation. Our policy for setting the timing of stock option grants and other stock-based awards does not allow executives to have any role in choosing the price of their options or other stock-based awards. We do not “back date,” “spring load” or reprice options or other stock-based awards.

Stockholder Advisory Approval of Executive Compensation

Our stockholders have an opportunity to cast an annual advisory vote on executive compensation. At the 2017 annual meeting of our stockholders, approximately 79% of the votes cast in the advisory vote on executive compensation were voted in favor of our executive compensation. The Compensation Committee believes this affirms our stockholders’ support of our approach to executive compensation. Therefore the Compensation Committee did not materially change its approach to executive compensation in 2017. The Compensation Committee will continue to consider the results of stockholder advisory votes on executive compensation when making future decisions regarding executive compensation. Further, we welcome direct stockholder feedback on our programs.

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Accounting and Tax Treatment of Compensation

While the accounting and tax treatment may be a consideration when determining compensation, our Compensation Committee maintains the discretion to make compensation decisions that are in the best interest of the Company and our stockholders regardless of the accounting and tax treatment.

Prior to the Tax Cuts and Jobs Act (“Tax Act”) that was signed into law on December 22, 2017, Section 162(m) of the Internal Revenue Code generally limited to $1 million the U.S. federal income tax deductibility of compensation paid in one year to a company’s CEO or any of its three next-highest-paid executive officers (other than its CFO). The Tax Act includes a major overhaul to Section 162(m), which takes effect for tax years beginning after December 31, 2017. In 2018, the Compensation Committee will be reviewing the Tax Act and its application and impact, if any, on our compensation programs.

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REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on this review and discussion, recommended to the Board of Directors that it be included in our Annual Report on Form 10-K for the year ended December 31, 2017 and in this Proxy Statement.

Samuel R. Fuller, Chair

M. Ashton Hudson

G.F. (Rick) Ringler, III

Donald C. Spitzer

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SUMMARY COMPENSATION TABLE

The following table contains compensation information for our Executive Chairman, CEO, CFO and one other officer (Mr. Quinley, who was an executive officer during 2017 before the Merger but, as a result of internal restructuring following the Merger, is not an executive officer as of December 31, 2017), along with our former CEO and former Chief Administrative Officer, Executive Vice President, General Counsel and Secretary. We refer to these persons as our NEOs. The information in the following table is presented in accordance with SEC requirements.