Item 5.02. Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.

(b) On August 13, 2012, Craig A. Knight, Chief Real Estate Investment Officer of Forestar Group Inc. (the "Company"), gave notice to the Company of his plan to retire effective September 30, 2012.

(d) On August 14, 2012, the Board of Directors of the Company appointed Charles W. Matthews as a director of the Company, filling a vacancy resulting from the death of Louis R. Brill. Mr. Matthews was appointed to the Audit Committee and Nominating and Governance Committee of the Board of Directors of the Company. For a description of the terms of the director compensation and agreements the Company enters into with its directors, see the description set forth in the section entitled "Director Compensation" in the Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on March 28, 2012.

(e) In connection with Mr. Knight's planned retirement, on August 14, 2012, a wholly-owned subsidiary of the Company and Mr. Knight entered into a Consulting Agreement. The term of the Consulting Agreement will be from October 1, 2012 to September 30, 2013, subject to extension for successive 6-month terms. Pursuant to the Consulting Agreement, Mr. Knight will provide consulting services related to entitlement, acquisition, and co-investor/partner relations efforts of the Company. Mr. Knight will be paid (a) $22,000 per month and (b) incentive payments for any mutually agreed-upon objectives. The Consulting Agreement may be terminated at any time by either party on ten days' notice to the other party.

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