KB Home CEO receives $24.4 million in 2007 despite housing downturn
The chief executive of KB Home received compensation valued at $24.4 million in fiscal 2007, a year in which the homebuilder swung to a loss amid the subprime credit crisis and the downturn in the housing market. Mezger's compensation package included $1 million in salary and a $6 million bonus that Mezger received for strengthening the company's balance sheet, improving performance on a customer satisfaction survey, cutting costs and developing senior leadership in his first year as CEO...The Los Angeles-based company posted a loss of $929.4 million... Revenue dropped 32 percent. See related KB Home construction warranty issues

KB Home CEO receives $24.4 million in 2007 despite housing downturn

By ELLIOT SPAGAT
AP Business Writer
Thursday, March 6, 2008
SAN DIEGO— The chief executive of KB Home received compensation valued at $24.4 million in fiscal 2007, a year in which the homebuilder swung to a loss amid the subprime credit crisis and the downturn in the housing market.

The bulk of Jeffrey T. Mezger's compensation came from stock and option grants that the company valued at $16.3 million, according to KB Home's proxy statement filed Wednesday with the Securities and Exchange Commission. Some of those grants were awards the company delayed in 2006 during a review of improperly dated stock option grants.

Mezger's compensation package included $1 million in salary and a $6 million bonus that Mezger received for strengthening the company's balance sheet, improving performance on a customer satisfaction survey, cutting costs and developing senior leadership in his first year as CEO.

Mezger received a $97,500 incentive for achieving certain performance goals. He also received other compensation of $972,604, which included $758,956 to compensate him for raising the exercise price on stock options, a measure related to the options scandal, and $135,484 for legal expenses related to negotiating his employment contract.

In 2006, Mezger earned about $5.9 million in total compensation, including $2 million in restricted stock awards. He was promoted late that year from executive vice president and chief operating officer after Bruce Karatz stepped down as chief executive after it was disclosed that he was the beneficiary of favorably dated stock option awards.

KB Home, one of the nation's largest homebuilders, said it faced "challenging market conditions of unusual severity" in 2007, reflecting an industry downturn marked by a glut of new and resale homes, foreclosures and turmoil in mortgage and credit markets.

The Los Angeles-based company posted a loss of $929.4 million in the fiscal year, which ended Nov. 30, compared with a profit of $482.4 million a year earlier. Revenue dropped 32 percent to $6.42 billion.

Mezger warned in January that 2008 "will be another tough year for the homebuilding industry."

The Associated Press calculations of total pay include executives' salary, bonus, incentives, 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, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the SEC.
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