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How KB Home CEO's pay went through the roof
La Times ^ | Dec 17, 2006 | Kathy M. Kristof and Annette Haddad

Posted on 12/16/2006 11:23:46 PM PST by jdm

KB Home may be the fifth-largest U.S. home builder, but it was No. 1 when it came to pay for its chief executive.

Over the last three years, former CEO Bruce Karatz made $232.6 million in compensation. That's nearly three times what the chief executives earned at Pulte Homes Inc. and Centex Corp., which are bigger and more profitable.

Among the nation's 12 largest builders, Karatz's closest competition came from Robert Toll, the CEO of Toll Bros. Inc. He pulled in $138.7 million over three years — a sum that Karatz outdid by nearly 70%.

Karatz, 61, retired under pressure last month after an internal investigation found that he picked stock option grant dates that inflated the value to himself and other executives.

Under his employment agreement, he could walk away with as much as $175 million in severance pay, pension benefits and stock options, a package that has prompted fresh criticism from large shareholder groups, who say Karatz has been overpaid for years.

To put Karatz's compensation in context, the Los Angeles Times reviewed pay packages for chief executives at the 12 largest home building companies for 2003 through 2005.

Karatz emerged as the clear leader, despite the fact that his Westwood-based company's 2005 results — $9.4 billion in revenue and $842.4 million in profit — put it in the middle of the pack.

So how did Karatz come out on top?

Compensation experts point to two features in his contract that helped guarantee outsized earnings.

(Excerpt) Read more at latimes.com ...


TOPICS: Business/Economy; News/Current Events
KEYWORDS: centex; homebuilding; kb; pulte
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Not too shabby [regardless] who you are! :O)


1 posted on 12/16/2006 11:23:48 PM PST by jdm
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To: Petronski; Toddsterpatriot

ping.


2 posted on 12/16/2006 11:24:12 PM PST by jdm
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To: jdm

Good work if you can get it.


3 posted on 12/16/2006 11:25:35 PM PST by Fierce Allegiance (Iron my shirts, woman!)
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To: Fierce Allegiance

LOL!!!!


4 posted on 12/16/2006 11:26:45 PM PST by jdm
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To: jdm
The first, and most significant, was a clause that promised Karatz a bonus between 1% and 2% of KB's earnings before taxes...Tying compensation to pretax profit without other restrictions all but guarantees massive payouts at a company of KB's size...

Doesn't take an idiot to figure that one out. It just takes an idiot to grant that kind of compensation package.
5 posted on 12/16/2006 11:29:51 PM PST by July 4th (A vacant lot cancelled out my vote for Bush.)
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To: jdm

Hey, a top mgt guy is worth every penny if that's what makes the company tick. Especially if you can get a crew to build a house for 37 seconds woth of the CEO's pay.


6 posted on 12/16/2006 11:30:39 PM PST by Fierce Allegiance (Iron my shirts, woman!)
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To: jdm
He never needs to work again for sure.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus

7 posted on 12/16/2006 11:30:53 PM PST by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives On In My Heart Forever)
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To: July 4th
Doesn't take an idiot to figure that one out. It just takes an idiot to grant that kind of compensation package.

Bruce E. Karatz, age 59. Since October 1993, Mr. Karatz has been Chairman and Chief Executive Officer of KB Home, a home construction and mortgage finance company. From 1985 to September 1993, Mr. Karatz served as President and Chief Executive Officer of KB Home. He is also a director of Edison International, an electric utility company, and Honeywell International, Inc., a technology and manufacturing company. He has been a director of Avery Dennison Corporation since November 2001. His present term expires in 2007.

How many other long-term CEOs can deliver this type of stellar long-term ROI?


8 posted on 12/16/2006 11:36:15 PM PST by jdm
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To: goldstategop

I take solace in the fact that a lot of that $175M is going to go to lawyers who will fight to let him keep a third.


9 posted on 12/16/2006 11:39:31 PM PST by Wally_Kalbacken
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To: jdm
He deserves his pay. The criticism would be entirely warranted if he mismanaged the company to the point of bankruptcy. Krantz's stellar compensation is a reward for a job well done. Now if only the Los Angeles Times were as well run as KB Home, could we expect them to complain about their own CEO's bonuses? Fat chance.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus

10 posted on 12/16/2006 11:40:24 PM PST by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives On In My Heart Forever)
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To: goldstategop
The protectionist automotive union folks here would blast this CEOs ROI to shareholders in a heartbeat. Yet, no matter the debate, these charts sort of speak for themselves....


11 posted on 12/16/2006 11:49:08 PM PST by jdm
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To: jdm

How is the LA Times stock doing, BTW? Do you think the management at that paper should tie THEIR salaries to investor performance?


12 posted on 12/16/2006 11:51:21 PM PST by Fido969 ("The hardest thing in the world to understand is income tax." - Albert Einstein)
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To: jdm

Never envy another Man's honest profit.


13 posted on 12/16/2006 11:56:09 PM PST by SShultz460
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To: SShultz460
Its none of the LAT's damned business what he does with his money. He lawfully EARNED it.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus

14 posted on 12/16/2006 11:58:11 PM PST by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives On In My Heart Forever)
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To: jdm

Good for him!


15 posted on 12/17/2006 12:00:46 AM PST by Clemenza (Never Trust Anyone With a Latin Tagline)
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To: Fido969
How is the LA Times stock doing, BTW? Do you think the management at that paper should tie THEIR salaries to investor performance?

L.A. Times parent company (Tribune Co.) did okay up until 2000:

However, David Geffen just offered $2B for LAT. I understand his reasoning and I understand the price, which seems terribly inflated to most, and perhaps it is.

16 posted on 12/17/2006 12:00:56 AM PST by jdm
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To: jdm

Look, the KB Homes CEO didn't deliver that profit, Alan Greenspan did. When the economy is flooded with money, as happened after the dot-com bubble burst, banks have to do something with the cash. They basically gave away home loans to anybody with a buck-six-bits in his pocket. That caused a lot of new homes to be sold, and KB benefited. It was not a brilliant business plan, it was simply a lot of available cash.


17 posted on 12/17/2006 12:05:33 AM PST by mike70
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To: jdm
Thou shalt not covet thy neighbour's house, thou shalt not covet they neighbour's wife, nor his manservant nor his maidservant, nor his ox, nor his ass, nor anything that is thy neighbour's.
18 posted on 12/17/2006 12:20:37 AM PST by Mr Ramsbotham (Laws against sodomy are honored in the breech.)
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To: mike70
Look, the KB Homes CEO didn't deliver that profit, Alan Greenspan did.

Since you can't directly invest in Alan Greenspan, KBH would have been the next best thing.

And meanwhile, GM is creeping back to where it was when I was in 2nd grade.

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19 posted on 12/17/2006 12:32:14 AM PST by jdm
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To: jdm
I don't care what they pay their CEO. It is up to the shareholders to decide what is appropriate.
20 posted on 12/17/2006 12:42:10 AM PST by DB
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