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Centex Corp, et al. – ‘DEF 14A’ for 7/17/03

On:  Monday, 6/16/03, at 3:03pm ET   ·   Effective:  6/16/03   ·   For:  7/17/03   ·   Accession #:  950134-3-9217   ·   File #s:  1-06776, 1-09624

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/16/03  Centex Corp                       DEF 14A     7/17/03    1:612K                                   RR Donnelley
          3333 Holding Corp

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 1: DEF 14A     Definitive Proxy Statement                          HTML    554K 

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ___________ )

Filed by the Registrant
Filed by a Party other than the Registrant

Check the appropriate box:

		Preliminary Proxy Statement				Confidential, for use of the Commission only
		Definitive Proxy Statement				(as permitted by Rule 14a-6(e)(2))
		Definitive Additional Materials
		Soliciting Material under Rule 14a-12

Centex Corporation
3333 Holding Corporation

Payment of Filing Fee (Check the appropriate box):

		No fee required.
		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

		Fee paid previously with preliminary materials.
		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

* Set forth the amount on which the filing fee is calculated and state how it was determined.

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CENTEX CORPORATION

and

3333 HOLDING CORPORATION

PROXY STATEMENT AND
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
OF EACH CORPORATION

To Be Held July 17, 2003

INDEX

     Proxies are being solicited separately by the Boards of Directors of Centex Corporation and 3333 Holding Corporation. To ensure representation of your shares at the annual meetings of BOTH companies, you must vote and submit BOTH proxies by telephone, over the Internet or by mail in the manner described in the accompanying proxies. Stockholders are encouraged to review the accompanying proxy statement of EACH company carefully.

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CENTEX CORPORATION
2728 N. Harwood
Dallas, Texas 75201

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held July 17, 2003

To the Stockholders:

     NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Centex Corporation, a Nevada corporation (“Centex”), will be held in the auditorium of the Dallas Museum of Art, 1717 N. Harwood, in the City of Dallas, Texas on Thursday, July 17, 2003 at 9:00 a.m. (C.D.T.) for the following purposes:

     The Board of Directors of Centex has fixed the close of business on May 29, 2003 as the record date for the determination of stockholders entitled to notice of and to vote at the meeting or any adjournment thereof. Only stockholders of record at the close of business on the record date are entitled to notice of and to vote at the meeting. The transfer books will not be closed.

     You are cordially invited to attend the meeting. Whether or not you expect to attend the meeting in person, you can be sure your shares are represented at the meeting by promptly voting and submitting your Centex proxy by telephone, by Internet or by completing, signing, dating and returning the accompanying form of Centex proxy in the enclosed envelope. Your Centex proxy will be returned to you if you choose to attend the meeting and request such return.

Dallas, Texas
June 16, 2003

     Proxies are being solicited separately by the Boards of Directors of Centex Corporation and 3333 Holding Corporation. To ensure representation of your shares at the annual meetings of BOTH companies, you must vote and submit BOTH proxies by telephone, over the Internet or by mail in the manner described in the accompanying proxies.

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CENTEX CORPORATION

PROXY STATEMENT

Annual Meeting of Stockholders
To Be Held July 17, 2003

INTRODUCTION

     The accompanying proxy, mailed together with this proxy statement, is solicited by and on behalf of the Board of Directors of Centex Corporation, a Nevada corporation (“Centex”), for use at the Annual Meeting of Stockholders of Centex to be held on July 17, 2003, and at any adjournment thereof (the “Annual Meeting”). The mailing address of the executive offices of Centex is 2728 N. Harwood, Dallas, Texas 75201. The approximate date on which this proxy statement and accompanying proxy were first sent to stockholders was on or about June 16, 2003.

Purposes of the Annual Meeting

     At the Annual Meeting, action will be taken upon the following matters:

     The Board of Directors of Centex (the “Board” or the “Board of Directors”) does not know of any matters that may be acted upon at the Annual Meeting other than the matters set forth in items (1), (2), (3) and (4) above.

Recommendation of the Board of Directors

     The Board of Directors of Centex recommends a vote FOR the election of the four nominees for director of Centex named in the accompanying Centex proxy, a vote FOR the approval of the Centex Corporation 2003 Annual Incentive Compensation Plan, a vote FOR the approval of the Centex Corporation 2003 Equity Incentive Plan and a vote FOR the ratification of the appointment of Ernst and Young LLP as auditors for fiscal year 2004.

TANDEM SECURITIES

     On November 30, 1987, Centex distributed as a dividend to its stockholders, through a nominee (such nominee and its successors are referred to as the “Nominee”), all of the 1,000 issued and outstanding shares of common stock, par value $.01 per share (“Holding Common Stock”), of 3333 Holding Corporation, a Nevada corporation (“Holding”), and 900 of the issued and outstanding warrants (the “Stockholder Warrants”) to purchase Class B Units of limited partnership interest in Centex Development Company, L.P., a Delaware limited partnership (the “Partnership”). 3333 Development Corporation, a Nevada corporation and a wholly-owned subsidiary of Holding, is the general partner of the Partnership.

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     The Nominee holds the shares of Holding Common Stock and the Stockholder Warrants on behalf of and for the benefit of persons who are from time to time the holders of the common stock, par value $.25 per share (“Centex Common Stock”), of Centex (“Centex Stockholders”). Each Centex Stockholder owns a beneficial interest in that portion of the Holding Common Stock and the Stockholder Warrants that the total number of shares of Centex Common Stock held by such stockholder bears to the total number of shares of Centex Common Stock outstanding from time to time. This beneficial interest of the Holding stockholders is not represented by a separate certificate or receipt. Instead, each Centex Stockholder’s beneficial interest in such pro rata portion of the shares of Holding Common Stock and the Stockholder Warrants is represented by the certificate or certificates evidencing such Centex Stockholder’s Centex Common Stock, and is currently tradable only in tandem with, and as a part of, each such Centex Stockholder’s Centex Common Stock. These restrictions on transfer are imposed by the terms of a nominee agreement (the “Nominee Agreement”) by and among Centex, Holding, the Partnership and the Nominee. Centex Common Stock certificates issued after the date of the Nominee Agreement bear a legend referring to the restrictions on transfer imposed thereby.

     Proxies are being solicited separately by the Boards of Directors of Centex Corporation and 3333 Holding Corporation. To ensure representation of your shares at the annual meetings of BOTH companies, you must vote and submit BOTH proxies by telephone, over the Internet or by mail in the manner described in the accompanying proxies.

ABOUT THE MEETING

Who Can Vote

     Record holders of Centex Common Stock at the close of business on May 29, 2003 may vote at the Annual Meeting. On that date, the issued and outstanding capital stock of Centex entitled to vote at the Annual Meeting consisted of 62,380,365 shares of Centex Common Stock. Each holder of Centex Common Stock will be entitled to one vote per share upon the election of directors and each other matter that is described above or that may be properly brought before the Annual Meeting. There are no cumulative voting rights.

How You Can Vote

     Centex Stockholders can vote their Centex shares at the Annual Meeting by voting and submitting the accompanying Centex proxy by telephone, over the Internet, or by completing, signing, dating and returning the Centex proxy in the enclosed envelope.

How Proxies Will be Voted

     Shares represented by valid proxies received by telephone, over the Internet or by mail will be voted at the Annual Meeting in accordance with the directions given. If no specific choice is indicated, the shares represented by all valid proxies received will be voted FOR the election of the four nominees for director named in the proxy, FOR the approval of the Centex Corporation 2003 Annual Incentive Compensation Plan, FOR the approval of the Centex Corporation 2003 Equity Incentive Plan, and FOR the ratification of the appointment of Ernst & Young LLP as auditors for fiscal year 2004.

     The Board does not intend to present, and has no information that others will present, any business at the Annual Meeting other than as is set forth in the attached Notice of Annual Meeting of Stockholders of Centex. However, if other matters requiring the vote of stockholders come before the Annual Meeting, it is the intention of the persons named in the accompanying form of Centex proxy to vote the proxies held by them in accordance with their best judgment in such matters.

How to Revoke Your Proxy

     Any Centex Stockholder has the unconditional right to revoke his, her or its Centex proxy at any time prior to the voting thereof by submitting a later-dated proxy, by attending the Annual Meeting and voting in person or by written notice to Centex addressed to Raymond G. Smerge, Secretary, Centex Corporation, 2728 N. Harwood,

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Dallas, Texas 75201. No such revocation will be effective, however, unless received by Centex at or prior to the Annual Meeting.

Required Vote

     The presence at the Annual Meeting, in person or by proxy, of a majority of the outstanding shares of Centex Common Stock is necessary to constitute a quorum. Abstentions and, by definition, broker non-votes will be counted as present for the purpose of establishing a quorum. The four nominees for director receiving a plurality of the votes cast at the meeting in person or by proxy shall be elected. All other matters will be adopted if the number of votes cast for the proposal exceed the number of votes cast against the proposal, provided that Proposal 3 requires the approval of a majority of the votes cast, in person or by proxy, at the meeting, but broker non-votes will not be considered as votes cast at the meeting for this purpose.

Expenses of Soliciting Proxies

     The cost of soliciting proxies for the Annual Meeting will be borne by Centex. Solicitation may be made by mail, personal interview, telephone or other electronic means by officers and other employees of Centex, who will receive no additional compensation therefor. To aid in the solicitation of proxies, Centex has retained the firm of Georgeson Shareholder Communications Inc., which will receive a fee of approximately $8,500, plus out-of-pocket expenses. In addition Georgeson will charge a fee of $5.00 for each telephone call it makes soliciting a proxy. Centex will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in forwarding proxy material to beneficial owners.

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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

Management

     The following table sets forth information as of May 29, 2003 with respect to the beneficial ownership of shares of Centex Common Stock by each director, director nominee and executive officer named in the Summary Compensation Table under “Executive Compensation,” individually itemized, and by all directors, director nominees and executive officers of Centex as a group (16 persons). Except as otherwise indicated, all shares are owned directly, and the owner has the sole voting and investment power with respect thereto.

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Certain Beneficial Owners

     The following table sets forth information with respect to the holders of shares of Centex Common Stock who are known to Centex to be beneficial owners of more than five percent of such shares outstanding.

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ITEM 1. ELECTION OF DIRECTORS

     Centex’s Amended and Restated By-laws provide for the division of the Board into three classes, with the directors in each class to hold office for staggered terms of three years each. Each class of directors is to consist, as nearly as possible, of one-third of the total number of directors constituting the entire Board. There are presently four directors in the class whose term expires at the Annual Meeting, four directors in the class whose term expires at the 2004 annual meeting and four directors in the class whose term expires at the 2005 annual meeting. Charles H. Pistor, Jr., who is currently a member of the Board of Directors, having reached mandatory retirement age, is not standing for re-election. The Board has appointed Thomas J. Falk as a director of Centex in the class whose term expires at the 2005 Annual Meeting. However, upon the retirement of Mr. Pistor, Mr. Falk will replace him in the class whose term expires at the Annual Meeting, and Mr. Falk will stand for election at the Annual Meeting. Accordingly, at the Annual Meeting, four directors are to be elected to serve until the 2006 annual meeting or until their successors are elected and qualified. Unless contrary instructions are indicated on the proxy, it is intended that the shares represented by the accompanying Centex proxy will be voted for the election of the four nominees for director named below or, if any of such nominees becomes unavailable (which is not anticipated), for such substitute nominees as the Board shall designate. A plurality of votes cast at the Annual Meeting, in person or by proxy, is required to elect such nominees. The Board recommends that the Centex Stockholders vote FOR the election of such nominees. The biographical information appearing below regarding the nominees for director and the continuing directors has been furnished to Centex by the respective nominees and directors.

Nominees for Director Standing for Election

     Dan W. Cook III, 68, is a member of the Compensation Committee and the Corporate Governance and Nominating Committee of the Board and has been a director since 1993. Mr. Cook has been engaged in private investments as his principal business for more than the past five years. He was a Senior Director of Goldman, Sachs & Co. from 1999 to 2001. From 1992 until 1999, Mr. Cook was a limited partner of The Goldman Sachs Group, L.P., and from 1977 until 1992, he was a general partner of Goldman, Sachs & Co. Mr. Cook is also a director of Brinker International, Inc. and a senior advisor to MHT Partners.

     Thomas J. Falk, 44, was recently appointed to the Board on May 14, 2003. He is the Chairman and Chief Executive Officer of Kimberly-Clark Corporation (“K-C”), a major consumer products company, having been elected Chairman of the Board and Chief Executive Officer of K-C, effective February 18, 2003, and President and Chief Executive Officer of K-C effective September 12, 2002. Prior to that, he served as President and Chief Operating Officer of K-C since his election in 1999. Mr. Falk previously had been elected Group President-Global Tissue, Pulp and Paper in 1998, where he was responsible for K-C’s global tissue businesses. He also was responsible for the Wet Wipes and Neenah Paper sectors, Pulp Operations and Consumer Business Services, Environment and Energy and Human Resources organizations. Mr. Falk joined K-C in 1983 and has held other senior management positions in K-C. Mr. Falk received his bachelors degree in accounting from the University of Wisconsin in 1980, and his masters of science in management from Stanford University in 1989. He serves as a national trustee of the Boys and Girls Clubs of America and is on the Dallas Regional Advisory Board for JPMorgan Chase.

     Laurence E. Hirsch, 57, is Chairman of the Board and Chief Executive Officer of Centex and is Chair of the Executive Committee of the Board. Mr. Hirsch has been a director since 1985. Mr. Hirsch has served as Chief Executive Officer of Centex since July 1988 and as Chairman of the Board since July 1991, and he served as President from March 1985 to July 1991. Mr. Hirsch is also Chairman of the Board of Directors of Centex Construction Products, Inc., a 65%-owned subsidiary of Centex (“CXP”). On April 1, 2003 he assumed the title of Chief Executive Officer of CXP. He also served as Chairman of the CXP board from January 1994 through December 1997 and from July 1999 to the present. In addition, he serves as a director of Belo Corp. and Luminex Corporation, and as an advisory director of Heidelberger Zement AG.

     Thomas M. Schoewe, 50, was elected to Centex’s Board of Directors in October 2001 and is a member of the Compensation Committee of the Board. He is the Executive Vice President and Chief Financial Officer of Wal-Mart Stores, Inc., where he has served since January 2000. Prior to joining Wal-Mart Stores, Mr. Schoewe spent 14 years at Black and Decker Corp., most recently as Senior Vice President and Chief Financial Officer. Previously, he had a 12-year career with Beatrice Companies, where he was Chief Financial Officer and Controller of Beatrice

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Consumer Durables, Inc. A native of the Chicago area, Mr. Schoewe is a graduate of Loyola University of Chicago, where he earned a BBA degree in finance. He also attended the University of Chicago’s executive MBA program and is a member of the Financial Executives Institute.

     Term Expiring in 2004

     Clint W. Murchison, III, 56, is a member of the Compensation Committee of the Board and has been a director since 1979. For more than the past five years, Mr. Murchison has been engaged in private real estate development and other investments as his principal business.

     Frederic M. Poses, 60, is a member of the Audit Committee and the Corporate Governance and Nominating Committee of the Board and was elected to the Board of Directors in July 2001. He has been Chairman and Chief Executive Officer of American Standard Companies Inc. since January 2000 and has served as a director of that company since October 1999. Before that time, beginning in 1998, he was President and Chief Operating Officer of Allied Signal, Inc., where he had spent his entire 30-year business career, starting as a financial analyst in 1969 and serving in various capacities, including President of the Engineered Materials business beginning in April 1988. He was also a director of AlliedSignal, Inc. from 1997 until October 1999. Mr. Poses also serves as a director of Raytheon Company.

     David W. Quinn, 61, retired as Vice Chairman of the Board and as an employee of Centex on March 31, 2002. Mr. Quinn is a director and has been since 1989. Mr. Quinn was elected Vice Chairman of the Board of Centex in May 1996 and was Chief Financial Officer of Centex from February 1987 until June 1997 and from October 1997 through May 2000. Mr. Quinn served as Executive Vice President of Centex from February 1987 until his election as Vice Chairman of the Board. Mr. Quinn is also a director of CXP and Elk Corp.

     Paul T. Stoffel, 69, is a member of the Audit Committee of the Board and has been a director since 1968. For more than the past five years, Mr. Stoffel has been Chairman of Paul Stoffel Capital Corporation, which is actively engaged in both public and private investments, as his principal business. Mr. Stoffel was formerly Managing Director of PaineWebber, Inc. Investment Banking. Mr. Stoffel is also a director of Holly Corporation.

     Term Expiring in 2005

     Barbara T. Alexander, 54, is Chair of the Audit Committee of the Board and has been a director since 1999. Since October 1999, Ms. Alexander has served as a Senior Advisor of UBS Warburg LLC and its predecessors (“UBSW”). Before that time, beginning in January 1992, she served as a Managing Director of UBSW, where she managed the Construction and Furnishings Group (North America) in the Corporate Finance Department. Prior to joining UBSW, Ms. Alexander was a managing director in the corporate finance department of Salomon Brothers. Ms. Alexander is past Chairman of the Board of the Joint Center for Housing Studies at Harvard University and is currently a member of that board’s Executive Committee and an Executive Fellow of the Joint Center for Housing Studies at Harvard University. Ms. Alexander also serves as a director of Harrah’s Entertainment, Inc.

     Juan L. Elek, 59, is Chair of the Corporate Governance and Nominating Committee of the Board and has been a director since 1995. Mr. Elek is founder and Co-Chairman of the Mexican investment-banking firm of Elek, Moreno, Valle y Asociados, where he has served since 1984. From 1978 through 1984, Mr. Elek held various positions with Banamex Financial Group, including Adjoining Managing Director and Head of International Banking. Mr. Elek is currently on the Board of Trustees of Southern Methodist University.

     Timothy R. Eller, 54, was elected President and Chief Operating Officer of Centex in April 2002 and has been a director since July 18, 2002. Mr. Eller joined Centex Homes’ Illinois operations in 1973 and was named Project Manager for the Illinois division in 1975. He became Vice President of the Minnesota division in 1977 and the division’s President in 1981. He was named an Executive Vice President of Centex Real Estate Corporation in 1985 and elected as the company’s President and Chief Operating Officer in January 1990. In July 1991, he was named President and Chief Executive Officer of Centex Homes and assumed the position as Chairman of Centex Homes in April 1998 through April 2003. In August 1998, Mr. Eller was named Executive Vice President of Centex. Mr. Eller is the Chairman of the High Production Home Builders Council of the National Association of Home Builders

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and is a life trustee of the National Housing Endowment. He is Chairman of the Policy Advisory Board for Harvard University’s Joint Center for Housing Studies, and serves on the Advisory Board of JP Morgan Chase Dallas Region and the Board of Trustees of the Nature Conservancy of Texas. Mr. Eller has a B.S. in construction management from the University of Nebraska.

Board Meetings, Fees, Committees and Attendance Records

     During Centex’s fiscal year ended March 31, 2003, the Board held four regularly scheduled meetings and each director attended all of the meetings of the Board. In addition, all directors attended all their respective committee meetings except as otherwise noted below.

     Board members who are not employees of Centex or any of its subsidiaries receive compensation in the amount of $130,000 per year, of which one-half must be received in the form of an option to purchase shares of Centex Common Stock. Each director may elect to receive all or a portion of the remaining $65,000 in cash or in an additional option to purchase shares of Centex Common Stock. For such purposes, options are valued on the Black-Scholes method. Each non-employee Committee Chair receives $15,000 per year for serving on a Board committee. All Board members are eligible to receive stock option grants and are reimbursed for reasonable expenses of attending meetings. In July 2001, each director was given a grant of 1,000 shares of restricted Centex Common Stock. These shares vest in April 2004, and are subject to forfeiture prior thereto if the director leaves the Board (other than pursuant to retirement at age 70 or older) or if the director acquires certain interests in a business competitive to Centex.

     Audit Committee

     The Audit Committee is composed of three directors who satisfy the independence requirements set forth in (i) Section 10A(m) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules adopted by the Securities and Exchange Commission (the “SEC”) thereunder and (ii) the corporate governance and other listing standards of the New York Stock Exchange as in effect from time to time (the “NYSE Standards”). The Audit Committee functions under a Charter, which was revised and readopted by the Board of Directors on May 14, 2003, attached to this Proxy Statement as Appendix A. The Board of Directors has determined that one or more of the members of the Audit Committee meets the definition of “audit committee financial expert” as such term is defined under the rules of the SEC. The Audit Committee assists the Board in its general oversight of (i) the integrity of Centex’s financial statements, (ii) Centex’s compliance with legal and regulatory requirements, (iii) the independent auditor’s qualifications and independence and (iv) the performance of Centex’s internal audit function and independent auditors.

     The following are certain key responsibilities of the Audit Committee:

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     The Audit Committee also reviews Centex’s corporate compliance program. The Audit Committee meets separately with the independent auditors and with members of the internal audit staff, outside the presence of Centex’s management or other employees, to discuss matters of concern, to receive recommendations or suggestions for change and to exchange relevant views and information. During the last fiscal year, the Audit Committee held five face to face meetings that were attended by all members except Mr. Stoffel, who missed one meeting. The Audit Committee also held six telephonic meetings, each of which typically addressed a specific topic. Mr. Stoffel participated in one of these meetings and in some cases he had reviewed and taken the same position as the rest of the Committee on the topic in advance of the meetings he was unable to attend.

Report of Audit Committee

To the Board of Directors of Centex Corporation:

     We have reviewed and discussed with management Centex Corporation’s audited financial statements as of and for the year ended March 31, 2003.

     We have discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended by Statement on Auditing Standards No. 90, Audit Committee Communications, by the Auditing Standards Board of the American Institute of Auditors.

     We have received and reviewed the written disclosures and the letter from the independent auditors required by Independence Standard No. 1, Independence Discussions with Audit Committees, as amended, by the Independence Standards Board, and have discussed with the auditors the auditors’ independence. We have also considered whether the auditors’ provision of non-audit services to Centex Corporation and its affiliates is compatible with the auditors’ independence.

     Based on the reviews and discussions referred to above, we recommend to the Board of Directors that the financial statements referred to above be included in Centex Corporation’s Annual Report on Form 10-K for the year ended March 31, 2003.

Audit Committee of the Centex Corporation Board of Directors

Barbara T. Alexander, Chairman
Frederic M. Poses
Paul T. Stoffel
May 14, 2003

     Corporate Governance and Nominating Committee

     The Corporate Governance and Nominating Committee is composed of three directors who are independent under applicable New York Stock Exchange listing standards. Pursuant to its charter, which is attached as Appendix B hereto, the Corporate Governance and Nominating Committee is responsible for advice and counsel to the Board and management regarding, and oversight of, the Company’s governance, including the selection and compensation of directors and the Board’s practices and effectiveness. The Committee does not solicit director nominations, but will consider recommendations sent to the Secretary of Centex at 2728 N. Harwood, Dallas, Texas 75201 that set forth:

     (i)  the name and address of the stockholder who intends to make the nomination and of the person(s) to be nominated;

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     (ii)  a representation that the stockholder is a holder of record of stock of Centex entitled to vote at the annual meeting of stockholders and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the letter;

     (iii)  a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by such stockholder;

     (iv)  such other information regarding each nominee proposed by such stockholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had each nominee been nominated by the Board; and

     (v)  the consent of each nominee to serve as a director of Centex if so elected. Any such letter must be received by Centex not later than April 18, 2004, for consideration at the 2004 annual meeting.

     During the last fiscal year, the Corporate Governance and Nominating Committee held two meetings that were attended by all members.

     Compensation Committee

     The Compensation Committee is composed of three “non-employee directors” as defined by Rule 16b-3(b)(3) promulgated under the Securities Exchange Act of 1934, as amended, who are independent under applicable New York Stock Exchange listing standards. Pursuant to its charter, which is attached as Appendix C hereto, the Compensation Committee assists the Board in (i) assessing whether the various compensation programs of Centex are designed to attract, motivate and retain the senior management necessary for Centex to deliver consistently superior results and are performance based, market driven and shareholder aligned, (ii) its oversight of specific incentive compensation plans adopted by Centex, with the approval of the Committee, including stock plans, supplemental executive retirement plans and short term and long term incentive compensation plans for members of senior management of Centex, (iii) assessing the effectiveness of succession planning relative to senior management of the principal subsidiaries of Centex, (iv) its approval, review and oversight of benefit plans of Centex, and (v) its oversight of the performance and compensation of the Chief Executive Officer of Centex and the other members of the senior management team of Centex. During the last fiscal year, the Compensation Committee held three meetings that were attended by all members. In addition, the Compensation Committee acted by unanimous written consent in lieu of meeting six times during fiscal year 2003.

Corporate Governance Guidelines

     The Corporate Governance and Nominating Committee has recently reviewed and recommended changes to Centex’s corporate governance guidelines and policies in order to strengthen Centex’s corporate governance and to comply with the requirements that have been or may be adopted by the SEC to implement the Sarbanes-Oxley Act of 2002 and new listing requirements proposed by the New York Stock Exchange. The Board approved these changes, and a summary of the new guidelines is set forth below, subject to further changes as final rules are issued by the SEC and the New York Stock Exchange.

     Director Independence

     A majority of directors shall be independent, and the Audit, the Compensation and the Corporate Governance and Nominating Committees are all composed entirely of independent directors. Independence for these purposes shall mean the independence requirements set forth in the Securities Exchange Act of 1934, as amended, and the rules adopted by the Securities and Exchange Commission thereunder and the corporate governance and other listing standards of the New York Stock Exchange as in effect from time to time.

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     Other Director Qualifications

     The qualifications of all directors are considered at the time a director is recommended for election by the Corporate Governance and Nominating Committee. Centex seeks directors with the highest personal and professional character and integrity who have outstanding records of accomplishment in diverse fields of endeavor and who have obtained leadership positions in their chosen business or profession. These persons should have demonstrated exceptional ability and judgment and have substantial experience of relevance to Centex. No person may stand for election as a director if 70 years of age or older.

     Changes in Personal Circumstances

     Each director will tender a resignation from the Board in the event of a material change in his or her personal circumstances, including a change in principal job responsibilities (other than a promotion with the director’s current employer). The decision whether to accept the resignation would be made by the Board, with a recommendation from the Corporate Governance and Nominating Committee.

     Service on Outside Boards

     Although there is no fixed limit on the number of other boards on which a director may serve, board memberships are considered along with other time commitments a prospective director may have and the effect this may have on his or her ability to serve effectively on the Centex Board of Directors. These factors will also be considered at the time of the annual performance evaluation of the Board and Committees referred to below.

     Director Responsibilities; Distributions of Board Materials

     Directors are expected to maintain a good attendance record, and familiarize themselves with the materials distributed prior to each Board or committee meeting. Absent special circumstances, such materials are provided at least three business days before the meeting, and earlier for major transactions.

     Board Agendas

     All directors may place items on agendas for Board meetings. Agendas for the meetings of committees of the Board are cleared by the chair of the Committee, and committee members may place items on the agenda.

     Lead Director

     The Board has appointed Charles H. Pistor, Jr. as its lead director. A new lead director will be appointed by the Board from among the independent directors at the upcoming annual meeting since Mr. Pistor is retiring from the Board. The lead director has been given the following responsibilities:

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     Meetings of Independent Directors

     The independent directors meet immediately after all Board meetings without management present.

     Director Access to Management and Independent Advisors

     All directors are able to directly contact members of management, including, in the case of the Audit Committee, direct access to the head of internal audit. Broad management participation is encouraged in presentations to the Board, and senior management and operations personnel making presentations frequently attend dinner meetings with the Board of Directors on the evening before the presentation. The Board and its Committees are empowered to hire at Centex’s expense their own financial, legal and other experts to assist them in addressing matters of importance to Centex. The Compensation Committee works directly with an executive compensation consultant.

     Director Compensation

     Directors are required to receive at least 50% of their total annual compensation of $130,000 in the form of an option to purchase shares of Centex Corporation common stock, and are permitted to choose a larger percentage of their compensation in the form of such an option. Each Committee Chair (other than the Executive Committee) receives additional compensation of $15,000 per year. Board members are eligible to receive stock options and restricted stock, but do not receive any other types of compensation which may compromise their independence. The amount and type of Board compensation is recommended by the Corporate Governance and Nominating Committee, which develops its recommendation working with outside compensation specialists, and approved by the Board.

     Director Orientation and Continuing Education

     Directors are provided extensive material regarding Centex upon their initial election to the Board, including a binder containing information regarding Centex and its policies and various administrative and legal matters. The binder is updated periodically. Other orientation procedures include meetings with senior executives of Centex and its major business units. Board meetings are occasionally held outside the corporate office to permit the directors to visit operating locations of the Centex companies.

     Evaluation of the Board and its Committees

     The Corporate Governance and Nominating Committee has established and will oversee an annual evaluation of the effectiveness of the Board and each Committee, as well as the composition, organization (including its Committee structure, membership and leadership) and practices of the Board. The initial evaluation will take place at the end of the 2004 fiscal year.

     Management Compensation, Evaluation and Succession

     The Board provides annual goals for the Chief Executive Officer, and the Compensation Committee evaluates the CEO’s performance, including his or her success in achieving these goals, in setting compensation. The Board recognizes that the selection of the CEO and the Chief Operating Officer and the oversight of succession planning are among the most important duties of the Board, and reviewed and approved the promotion of Tim Eller as President and Chief Operating Officer of Centex Corporation. The Compensation Committee evaluates the form and amount of compensation of Centex’s senior management, and provides a report thereon annually in the proxy statement.

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     Stock Ownership Guidelines

     The Board has established guidelines suggesting that the most highly compensated officers of Centex own a minimum amount of Centex’s Common Stock. Under these guidelines, each officer would own Centex Common Stock with a value equal to a multiple of base salary as described below:

     Currently, Messrs. Hirsch, Eller, Smerge and Stewart have met these guidelines, and Mr. Echols has until May 15, 2008 to meet the guidelines.

     Evaluation of Corporate Governance Guidelines

     Annually, the Corporate Governance and Nominating Committee reviews Centex’s Corporate Governance Guidelines and recommends changes to the Board if appropriate.

     Stockholder Ratification of Independent Auditors

     At the Annual Meeting each year, the holders of Centex Common Stock will be given the opportunity to vote on whether to ratify the selection of independent auditors for the following fiscal year.

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EXECUTIVE COMPENSATION

     The following table sets forth the cash and non-cash compensation for each of the last three fiscal years (or such shorter period of time during which such person was an executive officer) awarded to or earned by the Chief Executive Officer of Centex and the next four most highly compensated executive officers of Centex at the end of fiscal 2003 (the “named executive officers”). The five executives listed below comprise the “Senior Management Team” of Centex. Earlier this year, in reviewing long term incentive compensation, the Senior Management Team noted that there was a concentration of stock option awards in upper management (including the Senior Management Team). They requested and the Compensation Committee agreed to revise the stock option awards to the members of the Senior Management Team, reducing them by 50%, with the difference being awarded in the form of restricted stock and deferred cash awards, as described in the tables below. This action will make available over 300,000 shares of stock for option awards to others outside of upper management that would otherwise have gone to the Senior Management Team. See “Report of Compensation Committee Executive Compensation”.

Summary Compensation Table

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Option/SAR Grants in Last Fiscal Year⁽¹⁾

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Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values⁽¹⁾

Compensation Committee Interlocks and Insider Participation in Compensation Decisions

     The Compensation Committee includes the following non-employee directors: Dan W. Cook III, Charles H. Pistor, Jr., Thomas M. Schoewe, and Clint W. Murchison, III. None of Centex’s directors, officers or employees has any relationship requiring disclosure under Item 402(j) of Regulation S-K.

Report of Compensation Committee on Executive Compensation

     The Compensation Committee provides advice and recommendations to the Board concerning the salaries and bonuses of the executive officers of Centex. The Board approves those salaries and bonuses. The Compensation Committee also administers Centex’s equity compensation plans, incentive compensation plan, SERP, deferred compensation plan and LTIP, and is authorized under such plans to grant options to directors, officers and other key employees of Centex and its subsidiaries, to grant short and long-term incentive compensation awards to executive officers of Centex, to make awards of restricted stock to directors, officers and other key employees of Centex and its subsidiaries and to award LTIP units to selected employees of Centex and certain of its subsidiaries, partnerships and affiliates. The Compensation Committee is composed of “non-employee directors” as defined by Rule 16b-3(b)(3) promulgated under the Securities Exchange Act of 1934, as amended, and are independent under applicable New York Stock Exchange listing standards. This report describes the policies and principles that shape the structure of Centex’s executive compensation program.

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     Centex’s executive compensation program is structured to achieve the following objectives:

     To achieve its compensation objectives, Centex has structured an executive compensation program using a combination of short-term and long-term elements: (i) annual salary, (ii) annual bonus and (iii) long-term incentive compensation in the form of stock options and, in some cases, performance-based bonuses, awards of restricted stock and LTIP units. In addition, the executive officers of Centex are eligible to receive other benefits, such as medical benefits and Profit Sharing Plan contributions, that are generally available to employees of Centex and contributions under Centex’s SERP that are accrued for the named executive officers and certain other Centex executives.

     In structuring the specific components of executive compensation, Centex is guided by the following principles:

     The Committee attempts to structure its compensation programs to named executive officers as performance-based compensation that is tax deductible. However, the Committee may award compensation that is or could become non-deductible when such awards are in the best interest of Centex, balancing tax efficiency with long-term strategic objectives.

     Base Salary

     The Compensation Committee is responsible for recommending the base salary levels for the named executive officers. In developing salary amounts, the Compensation Committee reviews the salaries for similar positions in similarly-sized companies that engage in one or more of the principal businesses of Centex: homebuilding, financial services, contracting and construction services, and building materials. Included within the survey were those companies (other than Centex) that comprise the S&P Home Building Index in the “Performance Graph” below. The Compensation Committee confirmed that the base salaries of the named executive officers were consistent with its objective of setting base salaries within reasonable ranges for similar positions in competitive companies. In setting base salary levels, the Compensation Committee also considers the executive’s experience level and potential for significant contributions to Centex’s profitability.

     Incentive Bonus

     The Compensation Committee is also responsible for developing recommendations for the incentive bonuses awarded to the named executive officers at the end of each fiscal year. The annual incentive bonus program for the named executive officers has been structured to create financial incentives and rewards that are directly related to corporate performance during the fiscal year. In fiscal 2003, a portion of the annual bonus was determined pursuant

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to metrics, including return on beginning stockholders equity, percentage increase in net earnings, and the satisfaction of various individual goals, approved by the Compensation Committee.

     For fiscal 2004, the maximum annual bonus that may be paid to any of the named executive officers will be determined pursuant to an objective formula adopted by the Compensation Committee.

     Long-term Compensation

     In the past, the key component of Centex’s long-term compensation program has been the grant of stock options. The existing stock option program of Centex, which is subject to annual review and may be revised or superseded in the future, is designed to provide incentive to the participants under such program, which includes each named executive officer of Centex, to focus on maximizing Centex’s return to stockholders and to plan and prepare properly for Centex’s future. Under this program, options are to be granted to participants if in the preceding fiscal year Centex achieved specified objective performance goals. Each individual participant was allocated a potential number of options, a percentage of which would be granted if the objective performance goals are met. Under the program each participant’s potential award (the “Potential Award”) was based upon Centex’s return on beginning stockholders’ equity. For fiscal 2003, options were to be granted only if Centex’s return on beginning stockholders’ equity was at least 13%. The Potential Award ranged from 35% of a number of options fixed for each participant (if Centex’s return on beginning stockholders’ equity was 13%) to 120% of such fixed number (if Centex’s return on beginning stockholders’ equity equals or exceeds 18%). Once granted, options become exercisable at the rate of 8-1/4% per quarter in the fiscal year in which granted, 8-1/4% per quarter in the following fiscal year, and 8-1/2% per quarter in the third fiscal year. The named executive officers each earned the maximum Potential Award, but received only one-half the number of stock options calculated pursuant to the formula and in lieu of such stock options received deferred cash awards and restricted stock as described below. The option awards for each named executive officer were as follows: Mr. Hirsch —114,000 shares; Mr. Eller — 98,450 shares; Mr. Echols — 45,000 shares; Mr. Smerge — 36,000 shares; and Mr. Stewart — 24,000 shares.

     For fiscal 2003, as described above in the section captioned “Executive Compensation”, the named executive officers have received part of their Potential Award in the form of deferred cash compensation and part in the form of restricted stock. The amount of the deferred cash compensation awarded was equal to approximately 25% of the Potential Award, and the amount of the restricted stock awarded was equal to approximately 25% of the Potential Award, based on the Black-Scholes value of the Potential Award on the date of grant. There is no difference in the expense charge for accounting purposes between deferred cash, restricted stock and options since all options granted after April 1, 2003 are being expensed.

     The deferred cash compensation bears interest at Centex’s current blended borrowing cost, as determined annually by Centex’s Treasurer. Such cost is currently 6.57%. The deferred compensation and the restricted stock will vest at the rate of 8-1/4% per quarter in the fiscal year in which granted, 8-1/4% per quarter in the following fiscal year, and 8-1/2% per quarter in the third fiscal year. Payouts of vested amounts of deferred compensation will be made upon termination of the officer’s employment with Centex or pursuant to elections made by the officer at the time of grant or at limited times thereafter.

     The deferred cash awards for each named executive officer were as follows: Mr. Hirsch — $1,417,020; Mr. Eller — $1,758,458;
Mr. Echols — $559,350; Mr. Smerge — $447,480; and Mr. Stewart — $298,320.

     The executive officers will be entitled to normal cash dividends on the restricted stock. The restricted stock award for each named executive officer was as follows: Mr. Hirsch — 20,000 shares; Mr. Eller — 17,272 shares; Mr. Echols — 7,895 shares; Mr. Smerge — 6,316 shares; and Mr. Stewart — 4,211 shares.

     In fiscal year 2002, Mr. Eller participated in the Centex Homes incentive program, which is similar in structure to Centex’s, but which bases option grants upon the achievement of margin, return on net assets and customer satisfaction goals for Centex Homes. In connection with Mr. Eller’s appointment as President and Chief Operating Officer of Centex on April 1, 2002, the Compensation Committee agreed that Mr. Eller’s incentive compensation under the Centex program in fiscal years 2003 and 2004 will be at least equal to what he would have received under the Centex Homes program had he participated in that program for those years.

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     Since fiscal year 1992, all of the stock options granted by the Compensation Committee to named executive officers of Centex have been granted under performance based programs, except for the stock options granted to Mr. Echols when he joined Centex in June 2000 and to Mr. Stewart when he joined Centex in May 2000.

     Effective April 1, 2003, Centex began expensing all newly issued stock options under the fair value measurement provisions of Statement of Financial Accounting Standards No. 123 under which Centex will recognize compensation expense of a stock option award to an employee over the vesting period based on the fair value of the award on the grant date.

     In fiscal year 2002, the Board approved the LTIP for certain employees of Centex and its subsidiaries, partnerships and affiliates. Pursuant to the LTIP, participants may receive awards of LTIP units representing the right to receive shares of Centex Common Stock at the time the award is paid. Generally, awards vest at the rate of 8-1/4% per quarter in the fiscal year awarded and the next fiscal year and 8-1/2% in the third fiscal year, so that they are fully vested in three years, and are payable in seven years. Of the named executive officers, only Mr. Eller has received LTIP awards.

     In fiscal year 1995, the Board approved the SERP for certain employees participating in the Profit Sharing Plan. Pursuant to the Code, the Internal Revenue Service sets a limit (currently $200,000) of annual compensation that may be considered in determining, for the account of an eligible participant, Centex’s contribution to the Profit Sharing Plan. The SERP was established to eliminate the adverse treatment that higher-salaried employees receive under such rule by funding balances for each participant in an amount equal to the additional contribution that he or she would have received under the Profit Sharing Plan had 100% of his or her annual salary been eligible for a profit sharing contribution. Contributions accrued under the SERP for the benefit of the named executive officers vest under the same terms and conditions as the Profit Sharing Plan. Bonuses paid to participants are not included in making calculations for contributions made or accrued to recipients’ accounts under either the Profit Sharing Plan or the SERP.

     At the May 14, 2003 Board meeting, a one-time award of 100,000 stock units under the LTIP was made to Mr. Eller, in conjunction with his promotion to President and Chief Operating Officer. This award will be converted into Centex stock in May 2008, provided Mr. Eller has remained employed through April 1, 2008 in a senior management position with the Company.

     CEO Compensation

     The Chief Executive Officer of Centex participates in the same compensation programs as the other executive officers, with each component of his compensation determined by the Compensation Committee according to the same criteria. Incentive compensation to Mr. Hirsch for fiscal year 2003 was awarded in accordance with the existing incentive compensation plans.

     Mr. Hirsch’s bonus was the maximum tax-deductible bonus which could be awarded under the stockholder approved 2001 incentive compensation plan, or $5.4 million, yielding him a 5.9% increase in his bonus year over year. While Centex could have paid a significantly larger bonus to him, considering record net earnings for fiscal 2003, which increased by 45% over fiscal year 2002, a return on beginning stockholders’ equity of 26%, and his leadership in developing Centex’s long term strategic direction, Mr. Hirsch requested that the Company not do so. Under the 2001 incentive compensation plan, the maximum bonus to the CEO which will be tax-deductible is the product of six times annual salary.

Compensation Committee

Charles H. Pistor, Jr., Chair
Dan W. Cook III
Clint W. Murchison, III
Thomas M. Schoewe

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Performance Graph

     The following graph compares the yearly change in the cumulative total stockholder return on Centex Common Stock during the five fiscal years ended March 31, 2003 with the S&P 500 Index and the S&P Home Building Index. The comparison assumes $100 was invested on March 31, 1998 in Centex Common Stock and in each of the foregoing indices, and assumes reinvestment of dividends.

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Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Exchange Act requires Centex directors and executive officers, and persons who beneficially own more than 10% of a registered class of Centex’s equity securities, to file initial reports of ownership, reports of changes in ownership, and annual reports of ownership with the SEC and the New York Stock Exchange. Such persons are required by SEC regulations to furnish Centex with copies of all Section 16(a) forms that they file with the SEC.

     Based solely on its review of the copies of such forms received by it with respect to fiscal year 2003 or written representations from certain reporting persons, Centex believes that, except as noted below, its directors and executive officers, and persons who beneficially own more than 10% of a registered class of Centex’s equity securities have complied with all filing requirements required by Section 16(a) for fiscal year 2003 applicable to such persons. A filing on Form 4 for an option grant to Mark D. Kemp, Vice President and Controller, which was due in December 18, 2002, was not made until January 10, 2003. A filing on Form 5 relating to three acquisitions by Barbara Alexander pursuant to a dividend reinvestment plan, aggregating less than 50 shares, which was due on May 15, 2003, was made on June 12, 2003.

CERTAIN TRANSACTIONS

     In 1991, the Board approved an executive employment agreement with Mr. Hirsch. The agreement provides for a term that at all times has a remainder of two years, for discretionary bonuses and certain other fringe benefits, for the payment of two years’ base salary from the date of termination if the executive’s employment is terminated for any reason other than cause and, if the executive voluntarily resigns within two years after the occurrence of a change in control of Centex, for the payment of two years’ base salary plus average bonuses from the date of termination. Mr. Hirsch’s agreement further provides for a minimum annual base salary of $950,000 commencing April 1, 2003.

     David Quinn retired as Vice Chairman of the Board on March 31, 2002 and his employment with the Company ended. In connection with his retirement, Centex entered into a consulting agreement with Mr. Quinn pursuant to which he will provide Centex with consulting services related to acquisitions and dispositions, strategic, financial and structural planning and certain pending litigation. The agreement provides for annual compensation of $400,000 commencing April 1, 2002 and continuing for the first 24 months of the five-year term of the agreement. Mr. Quinn continues to serve as a director of Centex with a term currently scheduled to expire in 2004. He receives the same compensation as other non-employee directors for his services as a director.

     Centex also entered into an executive employment agreement with Mr. Echols upon the commencement of his employment as of June 1, 2000. The terms of this agreement are generally comparable to the agreement between Centex and Mr. Hirsch. The agreement provides for a minimum annual base salary of $520,000 commencing April 1, 2003.

     In May 1985 Centex approved the issuance and sale to Mr. Hirsch of a Centex debenture in the principal amount of $2,100,000. The debenture was to mature in March 1995. During that month, Centex and Mr. Hirsch amended the terms of the debenture to extend its maturity date from March 1995 to March 2000. During May 1999, Centex and Mr. Hirsch amended the terms of the debenture to extend its maturity date from March 2000 to March 2010. The debenture bore interest at a fluctuating rate equal to the lesser of the rate of interest on the bank loan described below or the highest lawful rate that Centex may pay. The debenture was subordinated to all senior debt of Centex and was convertible into 400,000 shares of Centex Common Stock at a price of $5.25 per share (the closing price of a share of Centex Common Stock on the New York Stock Exchange on May 6, 1985, as adjusted for the two-for-one stock splits of Centex Common Stock effected in August 1992 and March 1998). Centex guaranteed a bank loan made to Mr. Hirsch in an amount necessary to purchase the debenture. On May 29, 2003 Mr. Hirsch submitted the debenture to Centex and it was converted on such date to 400,000 shares of Centex Common Stock which were delivered to Mr. Hirsch. In conjunction with this conversion the bank loan Centex guaranteed was paid in full by Mr. Hirsch and the Centex guarantee was cancelled.

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     In fiscal 2002, Mr. Smerge obtained a construction loan from CTX Mortgage Company, LLC (“CTX”), a wholly-owned indirect subsidiary of Centex, to finance the construction of a home. The largest aggregate amount of this indebtedness outstanding at any time during fiscal 2003 was $530,824. As of June 17, 2002, the loan had been paid down and converted to a permanent financing in the principal amount of $400,000, which was the approximate amount outstanding on March 31, 2003. The permanent loan to Mr. Smerge bears interest at 6-1/2 % and is secured by the home. This loan has been sold by CTX to a third party. The loan was made in the ordinary course of business, was made on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present other unfavorable terms.

     In fiscal 2003, Mr. Echols obtained a loan from CTX of $821,000 in connection with the refinancing of a mortgage on his principal residence. On March 31, 2003, the outstanding amount of such loan was $818,000. This loan has been sold by CTX to a third party. The loan was made in the ordinary course of business, was made on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present other unfavorable terms.

     In fiscal 2003, Mr. Stewart had a non-interest bearing promissory note of $350,000 with Centex Corporation. This note was executed on May 31, 2000 (at the commencement of employment) and is payable in full on November 15, 2005. The carrying cost to Centex Corporation is deemed to be its blended borrowing cost, which was 6.57% for fiscal 2003. In fiscal 2003, Mr. Stewart obtained a loan from CTX of $997,000 in connection with the refinancing of a mortgage on his principal residence. On March 31, 2003, the outstanding amount of such loan was $992,000. This loan has been sold by CTX to a third party. The loan was made in the ordinary course of business, was made on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present other unfavorable terms.

     For transactions involving Centex and 3333 Holding Company and its executive officers, see “Certain Transactions” in the Proxy Statement of 3333 Holding Corporation.

ITEM 2.  PROPOSAL TO APPROVE THE CENTEX CORPORATION 2003 ANNUAL INCENTIVE COMPENSATION PLAN

     On May 14, 2003 the Board, with the recommendation of the Compensation Committee, approved the Centex Corporation 2003 Annual Incentive Compensation Plan (the “Annual Incentive Plan”) and its submission to the stockholders for their approval. The Annual Incentive Plan is designed to incentivize certain executive officers of Centex to make significant contributions to the overall performance and growth of Centex. The Annual Incentive Plan will also strengthen Centex’s ability to attract and retain talented officers. Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), approval of the Annual Incentive Plan by Centex Stockholders is required to enable Centex to obtain a deduction for awards paid under the Annual Incentive Plan to executive officers whose compensation for the taxable year is in excess of $1,000,000.

Description of the Annual Incentive Compensation Plan

     The principal provisions of the Annual Incentive Plan are summarized below. The summary is qualified in its entirety by reference to the full text of the Annual Incentive Plan, which is set forth as Appendix D to this Proxy Statement. Stockholders are encouraged to read the Annual Incentive Plan in its entirety.

     The Compensation Committee of the Board will determine which executive officers are eligible to participate in the Annual Incentive Plan and will set the range of awards thereunder for each participant. Under the Annual Incentive Plan, awards are made to each participant based upon the achievement of specified objective performance goals. The Compensation Committee may base a performance goal on one or more of the following business criteria that may be applied to the employee, one or more business units, or Centex as a whole: (a) earnings, either in the aggregate or on a per-share basis, reflecting such dilution of shares as the Compensation Committee deems appropriate, including operating earnings, pre-tax earnings, earnings before interest and taxes, and earnings before interest, taxes, depreciation and amortization; (b) gross or net revenue; (c) operating or net cash flow; (d) financial

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return ratios (e.g., return or net return on one or more of the following: assets, net assets, equity, invested capital, revenue); (e) margins, including net, operating or pre-tax margins; (f) total shareholder return; (g) financial ratios (e.g., debt to capitalization or debt to equity); (h) growth in financial measures or ratios (e.g., revenue, earnings, cash flow, stockholders’ equity, margins); or (i) customer satisfaction, based on specified objective goals, or a customer survey sponsored by Centex.

     The Compensation Committee will annually designate the performance criteria for the upcoming fiscal year and the potential award for each participant. Performance goals must be established by the Compensation Committee prior to the earlier to occur of 90 days after the commencement of the period of service to which the performance goals relate and the lapse of 25% of the period of service. A performance goal need not be based upon an increase or positive result under a particular business criterion but may include, for example, maintaining the status quo or limiting economic losses, as measured by reference to such criterion.

     The maximum potential award to any one participant may not exceed 2% of consolidated net income of Centex Corporation.

     Payment of any award earned will be made to the participant following the conclusion of the fiscal year in question upon the condition that the performance goal or goals specified in the relevant award agreement have been achieved and the Compensation Committee has reviewed and approved the award. As provided in the Annual Incentive Plan, certain events including change in control events can provide an earlier determination and payment date of an award.

Federal Income Tax Consequences

     The following is a brief summary of the federal income tax aspects of awards that may be made under the Annual Incentive Plan based on existing U.S. federal income tax laws. This summary is general in nature and does not address issues related to the tax circumstances of any particular participant. This discussion is not to be construed as tax advice.

     The recipient of a Cash Award will recognize ordinary compensation income at the time the payment is received. Centex will normally be entitled to a deduction for federal income tax purposes in an amount equal to the ordinary income recognized by such recipient.

Recommendation of the Board of Directors

     The Board of Directors of Centex unanimously recommends a vote FOR the approval of the Centex Corporation 2003 Annual Incentive Compensation Plan. If the requisite vote of Centex Stockholders is not obtained, the 2003 Annual Incentive Compensation Plan will become null and void. Unless indicated to the contrary, the enclosed proxy will be voted FOR the Annual Incentive Plan.

ITEM 3. PROPOSAL TO APPROVE THE CENTEX CORPORATION 2003 EQUITY INCENTIVE PLAN

     On May 14, 2003 the Board, with the recommendation of the Compensation Committee, approved the Centex Corporation 2003 Equity Incentive Plan (the “Plan”) and its submission to the stockholders for their approval. Centex has elected to propose this new equity incentive compensation plan at this time in order to:

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     The purposes of the Plan are to align the interests of Centex’s employees and directors to the interests of Centex’s stockholders while rewarding outstanding contributions to the success and profitability of Centex. The Plan will also strengthen Centex’s ability to attract and retain talented employees and directors.

     The Plan is intended to provide Centex the means by which to pay long-term equity incentive compensation to its employees and directors. The types of awards that will be used for officers under the Plan are primarily stock options, restricted stock and stock unit awards.

     In addition to the Plan, Centex will continue to have the ability to make grants under the Sixth Amended and Restated 1998 Centex Corporation Employee Non-Qualified Stock Option Plan (which is not available to directors and executive officers of Centex), the Centex Corporation 2001 Stock Plan, and the Centex Corporation Long-Term Incentive Plan until the share limits of such plans are exhausted (collectively, the “Prior Plans”). See “Prior Plans” below.

Description of the 2003 Equity Incentive Plan

     The following is a summary of the terms of the Plan and is qualified in its entirety by reference to the complete text of the Plan, which is attached to this proxy statement as Appendix E.

     Eligibility

     Persons eligible to be considered for awards under the Plan are directors of Centex and all employees of Centex and its subsidiaries which are 50% or more owned directly or indirectly by Centex who hold positions of responsibility and whose performance, in the judgment of the Compensation Committee, can have a significant effect on the success of Centex and its Affiliates.

     Shares Available for Awards

     Up to 3,000,000 shares of common stock may be issued under the Plan. Up to 1,000,000 of these shares may be used for Stock Awards (as described below) other than such awards that are subject to the achievement of specified performance based goals. The closing price per share of common stock on May 29, 2003 was $76.20.

     Shares subject to awards that are forfeited, terminated, expire unexercised, settled in cash, exchanged for other awards, tendered to satisfy the purchase price of an award, withheld to satisfy tax obligations or otherwise lapse again become available for awards. Shares delivered in settlement, assumption, or substitution of awards granted by another entity as a result of an acquisition do not reduce the number of shares available under the Plan.

     The Board may make appropriate adjustments in the number of shares available under the Plan to reflect any stock split, stock dividend, recapitalization, reorganization, consolidation, merger, combination or exchange of shares, distribution to shareholders (other than normal cash dividends or dividends payable in Centex stock) or other similar event.

     Administration

     The Compensation Committee has been designated by the Board to administer all awards under the Plan. The Compensation Committee has the discretion to determine the employees and directors who will be granted awards, the sizes and types of such awards, and the terms and conditions of such awards, subject to certain limitations set forth in the Plan. In addition, the Compensation Committee has full and final authority to interpret the Plan and may, from time to time, adopt rules and regulations in order to carry out the terms of the Plan.

     The Compensation Committee may delegate to the chief executive officer and other executive officers its administrative duties under the Plan.

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     Subject to certain restrictions contained in the Plan, the Compensation Committee has the discretion to extend the exercisability of an award, accelerate the vesting or exercisability of an award, or otherwise amend the award in a manner that is not adverse to, or is consented to, by the recipient of the award.

     Employee Awards

     At the discretion of the Compensation Committee, employees may be granted awards under the Plan in the form of Stock Options, Stock Awards or Performance Awards (including cash Performance Awards), as described below. Such awards may be granted singly, in combination, or in tandem.

     Stock Options. The Plan provides for the granting of non-qualified stock options ( “Stock Options”) to employees. Effective April 1, 2003 Centex began expensing newly issued stock options in accordance with the “fair value method” promulgated by the Financial Accounting Standards Board.

     A stock option is a right to purchase a specified number of shares of common stock at a specified grant price. All Stock Options granted under the Plan must have an exercise price per share that is not less than the Fair Market Value (as defined in the Plan) of the common stock on the date of grant and a term of no more than ten years. The grant price, number of shares, terms and conditions of exercise, and other terms of a Stock Option grant will be fixed by the Compensation Committee as of the grant date. However, Stock Options may not include provisions that “reload” the option upon exercise, and Stock Options may not be repriced, including by means of a substitute award.

     The exercise price of any Stock Option must be paid in full at the time the stock is delivered to the optionee. The price must be paid in cash or, if permitted by the Compensation Committee and elected by the participant, by means of tendering (either by actual delivery or by attestation) previously owned shares of common stock or shares issued pursuant to an award under the Plan.

     Stock Awards. The Plan also provides for the granting of stock awards, restricted stock and stock units (“Stock Awards”) to employees that consist of grants of common stock or units denominated in common stock. The terms, conditions and limitations applicable to any Stock Award will be decided by the Compensation Committee. However, any Stock Award that is not a Performance Award (defined below) must have a minimum restriction period of three years from the date of grant, except that (i) Stock Awards granted in lieu of salary or bonus need not be subject to such three-year requirement, (ii) in the event of a Change in Control (as defined in the Plan) all Stock Awards become immediately vested and fully exercisable and (iii) the Compensation Committee may provide for earlier vesting upon a termination due to death, disability, or retirement. At the discretion of the Compensation Committee, the terms of a Stock Award may include rights to receive dividends or dividend equivalents.

     Performance Awards. At the discretion of the Compensation Committee, any of the above-described awards may be made in the form of a performance award (“Performance Award”). A Performance Award is an award that is subject to the attainment of one or more future performance goals.

     Performance Goals. At the discretion of the Compensation Committee, awards under the Plan will be intended to qualify as performance-based compensation under Section 162(m) of the Code (“Qualified Awards”). Section 162(m) generally disallows deductions for compensation in excess of $1,000,000 for some executive officers unless the compensation qualifies as performance-based compensation. The Plan contains provisions consistent with the Section 162(m) requirements for performance-based compensation.

     In making Qualified Awards, the Compensation Committee may base a performance goal on one or more of the following business criteria that may be applied to the employee, one or more business units, or Centex as a whole: (a) earnings, either in the aggregate or on a per-share basis, reflecting such dilution of shares as the Compensation Committee deems appropriate, including operating earnings, pre-tax earnings, earnings before interest and taxes, and earnings before interest, taxes, depreciation and amortization; (b) gross or net revenue; (c) operating or net cash flow; (d) financial return ratios (e.g., return or net return on one or more of the following: assets, net assets, equity, invested capital, revenue); (e) margins, including net, operating or pre-tax margins; (f) total shareholder return; (g) financial ratios (e.g., debt to capitalization or debt to equity); (h) growth in financial measures or ratios (e.g.,

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revenue, earnings, cash flow, stockholders’ equity, margins); or (i) customer satisfaction, based on specified objective goals, or a customer survey sponsored by Centex.

     Employee Award Limitations. Under the Plan, no employee may be granted during any fiscal year:

     Non-employee Director Awards

     At the discretion of the Compensation Committee, non-employee directors may be granted awards under the Plan in the form of Stock Options or Restricted Stock, which may be in the form of Performance Awards, as each is described in the Employee Awards section above. Awards to directors may be granted singly, in combination, or in tandem. The terms, conditions and limitations applicable to awards to directors will be recommended by the Corporate Governance and Nominating Committee. However, it is currently anticipated that awards to directors may not be sold, transferred, or otherwise disposed of during the non-employee director’s service on the Board, except to certain family limited partnerships. Non-employee directors may not be granted Stock Options covering or relating to more than 25,000 shares of common stock, or more than 15,000 shares of Restricted Stock, during any fiscal year.