Home Boom Pays Off Big for Two Execs

California’s booming home market, which pushed new construction to record levels in 1998, paid off handsomely at Standard Pacific Corp., whose top two executives took home bonuses exceeding $1 million.

Stephen Scarborough, president of the Costa Mesa home builder, earned $2.38 million last year, a 90% increase from 1997. The bulk of the pay came from a $1.97 million bonus, which was 96% higher than last year.

Chairman Arthur Svendsen earned $1.58 million, a 52% increase from a year ago. Most of that came from a $1.17-million bonus, which was 72% higher than the previous year.

Their compensation packages were disclosed in the company’s annual proxy statement filed Friday with the Securities and Exchange Commission. Scarborough declined to comment on his pay; Svendsen couldn’t be reached.

Their bonus increases outpaced the performance of the company’s sales and profits, and its stock price in 1998.

Standard Pacific, which ranks among the nation’s largest home builders, posted the best revenue in its 38-year history last year, as sales surged 30%, to $760 million. Profits jumped 68%, to $46 million, as home sales rose 19%, to 2,328. The average sales price of those homes increased 7%, to $329,972.

But the company’s shares fell 10% over the same period, closing the year at $14.13. They have fallen 6% since then, closing Friday at $13.25, up 34 cents in New York Stock Exchange trading.

Many home builders have seen their stock prices fall over the past year because “Wall Street believes interest rates won’t stay this low much longer, and that will affect home sales,” said Craig Silvers, an analyst at Sutro & Co., a San Francisco investment firm.

Standard Pacific “has performed extraordinarily well over the past couple of years,” said Silvers, noting that the company has beat analysts’ earnings estimates for four consecutive quarters. “If bonuses are based on performance, I think they deserve them.”

The 50-year-old Scarborough, who has been president of Standard Pacific since 1996, saw his base salary rise 57%, to $403,600. Under the company’s compensation plan, Scarborough receives a bonus equal to 2.5% of the pretax operating profits of the home building and corporate segments of the company.

He also was awarded options for 120,000 shares of Standard Pacific stock that can be exercised at $12 a share, and 75,000 shares exercisable at $17.

Svendsen, 75, saw his base salary rise 13%, to $402,400. The method for determining his bonus, in place since 1978, calls for a payment of 1.5% of the consolidated pretax operating profits of the company.

Svendsen also owns 9.4% of Standard Pacific’s shares, a stake worth $37.1 million. He has no stock options in the company, according to the proxy.