KB Home Chief Gets $34-Million Pay Package
Countless Californians have ridden the real estate wave to great riches, but few as much as Bruce Karatz.
The chairman and chief executive of Westwood-based builder KB Home earned $34 million in salary and bonuses in its fiscal year ended Nov. 30, a 70% increase that nearly matched the company’s surge in annual profit, KB said in a Securities and Exchange Commission filing Thursday.
Karatz received a $28-million restricted stock award, double what he got in 2004, the company said. He also had his base salary bumped up 10% to $1.1 million. His $5-million annual cash bonus remained unchanged.
In addition to salary and bonuses, Karatz also received stock options on 250,000 shares with an exercise price of $62.34 and $3.53 million under the company’s long-term incentive program. He also enjoyed $296,000 in perks, including use of the corporate jet.
Shares of KB fell 13 cents Thursday to $69.99.
Karatz, 60, has long been one of California’s highest-paid executives. In 2004, his total compensation, which included stock option grants and other perks in addition to salary and bonuses, ranked him sixth among executives at the state’s 100 largest public companies.
And recently he joined the elite ranks of best-compensated U.S. CEOs. Last year, he placed 20th on Forbes magazine’s list of highest-paid chief executives, thanks largely to the nation’s booming real estate market. Soaring home prices have meant hefty profits for builders -- and their investors.
Karatz’s compensation is directly tied to his company’s financial performance. KB Home recorded its best year ever in fiscal 2005, booking a 75% increase in annual profit to $842 million on a 34% gain in sales to $9.4 billion. The company’s shares rose 59% during that period.
KB Home’s stock has fallen 4% this year on evidence that demand for new homes nationwide is softening. On Thursday, luxury builder Toll Bros. Inc. reported a 29% drop in orders in its most recent quarter. KB Home has warned that a rise in cancellations and a decline in net orders could force it to revise its revenue projections when it reports first-quarter results next month.
KB Home built 37,000 homes in 2005, a 19% increase from the previous year. It ended 2005 with a record backlog of 27,000 homes -- valued at $6.7 billion -- sold but not yet constructed.