KB Home to double CEO’s base pay
KB Home, whose longtime chief executive was forced out last fall amid a stock options probe, said Thursday that it would double the base salary of new CEO Jeffrey Mezger. But it withheld other details of his compensation package until the board completes a review of its pay policy.
Mezger, who served as the Los Angeles-based builder’s chief operating officer before being tapped for the top job in November, will earn $1 million in annual salary, the same as his predecessor, longtime KB Home leader Bruce Karatz.
But Karatz also earned millions of dollars more in other compensation, particularly from stock option grants that had been improperly dated to enhance their value. Karatz’s compensation was $232.6 million in the three years before he retired and he could get a severance payment of $175 million, according to a Times review of government filings.
Mezger also benefited from rich option grants and bonuses under Karatz’s watch. In 2005, he earned a base salary of $498,333. But he also received a $2.5-million bonus, plus long-term compensation of $7.2 million in restricted stock awards and was given $7.5 million in stock option grants for a total of $17.7 million.
KB Home said in a Securities and Exchange Commission filing Thursday that its board was still assessing its executive compensation policy and would provide details of Mezger’s overall pay package next month when it completes its review.
The scandal over the backdating of options is forcing KB Home to restate financial results for fiscal years 2003, 2004 and 2005, and for the 2006 quarters ended Feb. 28 and May 3. Results are expected next month.
More than 100 companies, including KB Home, are under federal scrutiny for their option grant practices.
Shares of KB Home fell $1.69 to $52.12.
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