$6 Million Bonus For KB Homes CEO When Company Loses $929.4 Million
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KB Home Reported 2007 Fourth Quarter and Full Year Results posted on Jan 08, 2008.
“The Company delivered 23,743 new homes in fiscal year 2007, down 26% from the 32,124 new homes it delivered in fiscal year 2006. Revenues totaled $6.42 billion in fiscal year 2007, decreasing 32% from $9.38 billion in fiscal year 2006, reflecting fewer new home deliveries and a 9% year-over-year decline in the average selling price to $261,600 from $287,700. The Company posted a loss from continuing operations of $1.41 billion in fiscal year 2007 due to non-cash charges associated with inventory and joint venture impairments and land option contract abandonments; goodwill impairment; and the deferred tax assets valuation allowance. In fiscal year 2006, the Company generated income from continuing operations of $392.9 million. Including the results of its French discontinued operations, the Company posted a net loss of $929.4 million or $12.04 per diluted share in fiscal year 2007 and net income of $482.4 million or $5.82 per diluted share in fiscal year 2006.”
Then a SEC filing on Jan 25, 2008 reported the following:
On January 22, 2008, the Management Development and Compensation Committee (the “Compensation Committee”) of KB Home (the “Company”) determined fiscal 2007 bonuses for the Company’s Named Executive Officers, in the amounts set forth below:
| Named Executive Officer/Title | Fiscal 2007 Bonus |
| Jeffrey T. Mezger/President and Chief Executive Officer | $6,000,000 |
| Domenico Cecere/Executive Vice President and Chief Financial Officer | $400,000 |
| William R. Hollinger/Senior Vice President and Chief Accounting Officer | $450,000 |
| Kelly Masuda/Senior Vice President and Treasurer | $350,000 |
Also on January 22, 2008, the Compensation Committee determined that the payment of any fiscal 2008 incentive compensation to Messrs. Mezger, Hollinger and Masuda, and to Glen Barnard, the Company’s Senior Vice President, KBnxt Group, shall be subject to the achievement of an objective performance goal based on a specified level of pre-tax income or loss of the Company. In each case, the amount of incentive compensation earned upon achievement of the goal can be reduced or eliminated at the discretion of the Compensation Committee.
The SEC Filing may be found on KB Home’s website, Investor Relations>Financial Information>SEC Filings.
I’m going to keep my mouth shut before I get hit with a lawsuit. But, what are you thoughts about this? Comment below.