Ryland Awards $12-Million Bonus to CEO
After logging stellar financial results in 2004, Ryland Group Inc. paid Chairman and Chief Executive R. Chad Dreier $13.24 million in salary and bonuses, a 25% increase, for running the seventh-largest U.S. builder.
The Calabasas company in a regulatory filing Monday said it upped Dreier’s bonus to $12.24 million in cash and stock from $9.57 million awarded in 2003. His base salary of $1 million was unchanged.
Dreier’s pay hike mirrored an exceptional year for Ryland, which reported a 32% jump in annual profit to $320 million on a 15% increase in revenue, to $4 billion, for the year ended Dec. 31.
The company’s shares rose 35% during the same period.
Ryland operates under a “pay-for-performance philosophy,” according to the filing, which rewards top executives with direct financial incentives in the form of annual cash bonuses tied to the company’s profitability.
Last year, Ryland built 15,000 homes in 17 states, including 1,300 in California. That was a 3% increase from 2003. It ended the year with a record backlog of 7,620 units valued at $2.1 billion.
Dreier has been one of California’s highest-paid executives for years. In 2003, his total compensation was $18.2 million, ranking him 14th among executives at the state’s 100 largest public firms.
In 2004, Dreier’s total compensation rose 9% to $19.8 million. He received $6.6 million in additional perks and other compensation, including use of the company airplane, contributions to the company’s retirement plan, term-life insurance payouts and reimbursement of medical and fitness expenses.
Ryland stock hit a 52-week high of $71.81 in New York Stock Exchange trading Monday. But the shares lost 6% on Tuesday after the company warned that the recent bad weather in Southern California and elsewhere would delay closings in the first quarter, causing earnings per share to clock in below Wall Street expectations of $1.30 a share. Ryland shares fell $4.27 to $67.54.
Still, investors remain bullish on Ryland -- and the home building sector in general. Publicly traded builders are coming off one of the best years in history as strong demand, persistently low mortgage rates and rising prices boosted their bottom lines.
In a research note to clients this week, analyst Carl Reichardt of Wachovia Capital Markets maintained his “outperform” rating on Ryland stock despite the weather-related setback.
“We would use weakness created by this change, if any, as a buying opportunity,” he wrote.
Also Monday, Lennar Corp. reported that it rewarded CEO Stuart Miller with $16 million in salary and bonuses last year, a 23% increase from 2003.
The Miami-based company, which is among the top builders in California, reported a 25% jump in annual profit.
