CEO

KB Home CEO gets $6.1 million in 2010 compensation

AP News
|
Posted: Mar 02, 2011 11:25 PM
KB Home CEO gets $6.1 million in 2010 compensation

KB Home CEO Jeffrey Mezger received compensation valued at about $6.1 million in fiscal 2010, about 17 percent less than what he got the year before, according to an Associated Press review of data filed with regulators.

The executive stood to receive as much as $2.25 million more under an incentive bonus plan because the homebuilder achieved one of three key performance targets outlined by the company's executive compensation committee.

But the panel decided to slash his incentive pay almost in half, citing the company's overall financial performance and expected business conditions amid a still-ailing U.S. housing market.

In the fiscal year ended Nov. 30, Mezger was awarded a base salary of $1 million, the same as the previous year, according to documents filed with the Securities and Exchange Commission last week.

He also received perks valued at $66,518, down 21 percent from $83,699 the year before.

Matching retirement plan contributions of $54,700 accounted for the bulk of Mezger's perks package. The rest, $11,818, went toward paying medical and life insurance policy premiums.

Mezger didn't receive a cash bonus, or any stock awards.

Most of his compensation came in the form of option awards and a performance-based cash bonus totaling about $5 million combined.

The executive received $2.3 million in option awards, down 34 percent from $3.5 million the year before.

Mezger's performance-based cash bonus was unchanged from the 2009 fiscal year at $2.75 million, but it could have been as high as $5 million.

To be eligible for the maximum incentive pay amount, Mezger needed KB Home to achieve at least one of three objectives: ending the fiscal year with a pretax loss not greater than $200 million, excluding special items; delivering no fewer than 7,500 homes; and, massing a land parcel pipeline of 10,000 lots.

KB's home deliveries, or completed sales, for fiscal 2010 were 7,346 _ just short of the target.

The company did winnow its full-year, pretax loss, excluding inventory impairments and other one-time items, to $56.4 million _ achieving the pretax loss target with room to spare.

Regardless, the compensation committee decided to reduce Mezger's incentive payout to $2.75 million from the $5 million he was qualified to receive.

Beyond that move, the committee praised Mezger, saying his "strong and decisive leadership" was vital to the company's performance in 2010.

The Associated Press formula is designed to isolate the value that the company's board placed on the executive's total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.

The calculations don't include changes in the present value of pension benefits, making the AP total different in most cases than the total reported by companies to the Securities and Exchange Commission.

KB Home, based in Los Angeles, builds homes to order for entry level, move-up buyers and seniors in 12 states.

Like other builders, the company continued to grapple last year with the lingering effects of the housing downturn, now in its fifth year.

High unemployment, tighter bank lending standards and uncertainty about home prices have kept many people from buying homes. Builders also face heightened competition from a glut of resale homes, many of them sharply discounted foreclosed properties.

Federal tax credits for homebuyers helped stoke sales early in 2010 until they expired in April. Sales tanked afterward and the year ended as the worst year for new home sales since at least 1963.

The company delivered 13.5 percent fewer homes in the last fiscal year compared with fiscal 2009.

KB ended fiscal 2010 with a net loss of $69.4 million, or 90 cents a share. That compared with a loss of $101.8 million, or $1.33 a share, a year earlier. Revenue for the year fell 13 percent to $1.59 billion.