Posted on 12/16/2006 11:23:46 PM PST by jdm
KB Home may be the fifth-largest U.S. home builder, but it was No. 1 when it came to pay for its chief executive.
Over the last three years, former CEO Bruce Karatz made $232.6 million in compensation. That's nearly three times what the chief executives earned at Pulte Homes Inc. and Centex Corp., which are bigger and more profitable.
Among the nation's 12 largest builders, Karatz's closest competition came from Robert Toll, the CEO of Toll Bros. Inc. He pulled in $138.7 million over three years — a sum that Karatz outdid by nearly 70%.
Karatz, 61, retired under pressure last month after an internal investigation found that he picked stock option grant dates that inflated the value to himself and other executives.
Under his employment agreement, he could walk away with as much as $175 million in severance pay, pension benefits and stock options, a package that has prompted fresh criticism from large shareholder groups, who say Karatz has been overpaid for years.
To put Karatz's compensation in context, the Los Angeles Times reviewed pay packages for chief executives at the 12 largest home building companies for 2003 through 2005.
Karatz emerged as the clear leader, despite the fact that his Westwood-based company's 2005 results — $9.4 billion in revenue and $842.4 million in profit — put it in the middle of the pack.
So how did Karatz come out on top?
Compensation experts point to two features in his contract that helped guarantee outsized earnings.
(Excerpt) Read more at latimes.com ...
ping.
Good work if you can get it.
Hey, a top mgt guy is worth every penny if that's what makes the company tick. Especially if you can get a crew to build a house for 37 seconds woth of the CEO's pay.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus
Bruce E. Karatz, age 59. Since October 1993, Mr. Karatz has been Chairman and Chief Executive Officer of KB Home, a home construction and mortgage finance company. From 1985 to September 1993, Mr. Karatz served as President and Chief Executive Officer of KB Home. He is also a director of Edison International, an electric utility company, and Honeywell International, Inc., a technology and manufacturing company. He has been a director of Avery Dennison Corporation since November 2001. His present term expires in 2007.
How many other long-term CEOs can deliver this type of stellar long-term ROI?
I take solace in the fact that a lot of that $175M is going to go to lawyers who will fight to let him keep a third.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus
How is the LA Times stock doing, BTW? Do you think the management at that paper should tie THEIR salaries to investor performance?
Never envy another Man's honest profit.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus
Good for him!
L.A. Times parent company (Tribune Co.) did okay up until 2000:
However, David Geffen just offered $2B for LAT. I understand his reasoning and I understand the price, which seems terribly inflated to most, and perhaps it is.
Look, the KB Homes CEO didn't deliver that profit, Alan Greenspan did. When the economy is flooded with money, as happened after the dot-com bubble burst, banks have to do something with the cash. They basically gave away home loans to anybody with a buck-six-bits in his pocket. That caused a lot of new homes to be sold, and KB benefited. It was not a brilliant business plan, it was simply a lot of available cash.
Since you can't directly invest in Alan Greenspan, KBH would have been the next best thing.
And meanwhile, GM is creeping back to where it was when I was in 2nd grade.
That's just the thing. Many here who argue over his pay, would not have argued, had they taken part in the 2,000%+ return since Seinfeld was in its second season! :O)
Time to buy KBH:
Circa 1991
And...
Time to sell:
2006
Okay, maybe that was a "mean" analogy, but you get what I'm saying! :O)
the fact that CEO salary remotely approaches this amount is indeed obscene and does not do justice to the disadvantaged in our society who work hard to enjoy even a decent lifestyle
How nice that yet another leader of a public company treated the company as his personal cookie jar. Secret backdating of options is nothing but stealing from the company's shareholders.
I don't object to a top executive making a mint if the company performs well. However, what this guy and others did went beyond that. The secretive backdating of stock options amounts to stealing from the shareholders.
That is funny...
You did opt to vote your proxy in every election, no? I did and made sure that I voted to allow the board everything they asked for. How did you vote?
How do you explain the real estate booms that happened concurrently in other parts of the world, some of which were bigger than here?
That chart indicates performance was due more to the real estate market than CEO performance.
Nothing honest about it. He's stealing from the stockholders.
One way they generated the profits was by using contractors that hire illegals.
Hey, a top mgt guy is worth every penny if that's what makes the company tick. Especially if you can get a crew to build a house for 37 seconds woth of the CEO's pay.
Given that 4 other companies which are more profitable do better with a lower paid CEO, this company has been ripped off by a fraud. The fact that they were stupid enough to agree to it means they deserved to be.
All of this stuff is about to resurface in a few months.
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