PulteGroup CEO got $6.6M in 2010 compensation

AP News
Posted: Apr 06, 2011 7:06 PM
PulteGroup CEO got $6.6M in 2010 compensation

PulteGroup Inc. CEO Richard J. Dugas Jr. received compensation valued at about $6.6 million in 2010, an increase of 13 percent from what he got the year before, according to an Associated Press review of the homebuilder's proxy statement.

Dugas, who also holds the titles of chairman and president, was awarded a base salary of $1.2 million, a 20 percent increase from the previous year, according to documents filed with the Securities and Exchange Commission on Tuesday.

The company's compensation committee boosted Dugas' salary to reflect his added role of chairman.

Dugas also received stock awards valued at $1.6 million at the time they were granted, up 22 percent from a year earlier, and option awards valued at about $2.1 million on the day they were granted, up 25 percent from the year before.

PulteGroup's compensation committee noted it elected this year to reduce the amount of Dugas' equity grants by $3.6 million from their 2009 levels in light of the executive's performance in 2010. The reduction will show up in the 2011 proxy.

Dugas' performance-based cash bonus fell 6 percent from the prior year to about $1.7 million.

PulteGroup based its executives' annual incentive pay on the company's full-year pretax income, adjusted gross margin and number of home closings.

Management failed to meet the 2010 target on pretax income, which was more heavily weighed than the other two metrics. But it exceeded the goals set for adjusted gross margin and number of home closings.

The compensation committee also noted Dugas achieved several individual performance goals, including improving the builder's management of selling, general and administrative expenses, relative to other homebuilders and progress developing the company's brand.

Dugas also got perks valued at $17,936, down 66 percent from what he received in 2009.

The perks package covered the cost of financial planning services and life insurance premiums, among other services.

Dugas did not receive a bonus for 2010, or in the prior two years.

His total compensation in 2009 was about $5.9 million.

The AP formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year.

The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.

The value that a company assigned to an executive's stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time.

Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.

PulteGroup, based in Bloomfield Hills, Mich., operates in 29 states and the District of Columbia. Its Del Webb brand is the nation's largest builder of communities for adults age 55 and over.

Like other builders, the company continued to grapple last year with the housing downturn, which extended into its fifth year in 2010.

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.

PulteGroup delivered 14 percent more homes than the year before, thanks largely to its acquisition of rival Centex Corp. in late 2009.

The average selling price of its homes inched up to $259,000, from $258,000.

For 2010, PulteGroup narrowed its loss to $1.1 billion, or $2.90 a share. That compared with a loss of $1.18 billion, or $3.94 a share, a year earlier.

The builder's per-share results for 2010 were based on 379 million shares outstanding, higher than the year-earlier amount as additional shares were issued for the acquisition of Centex.

Revenue for the year improved to $4.57 billion, from $4.08 billion.

PulteGroup's stock price fell by nearly a quarter in 2010, dropping to $7.52 at the end of the year from $10 at the close of 2009.