The chief executive of struggling housing developer KB Home Corp., Jeffrey T. Mezger, received more than $9.6 million in compensation in fiscal 2008, the Westwood company said Friday.
KB Home, California's largest home builder, lost nearly $1 billion last year as the industry was battered by a glut of foreclosed homes that undercut the prices of new residences and shrank demand. Buyers were also discouraged by the reeling economy and challenges finding loans.
Mezger's compensation was a 41% cut from the nearly $16.4 million he was paid in fiscal 2007, according to a proxy filing with the Securities and Exchange Commission.
The 53-year-old chief executive earned a base salary of $1 million, the same amount as in 2007, when he received a $6-million bonus. Mezger did not get a bonus in 2008, but he did receive more than $1 million worth of stock and almost $4.6 million in stock options.
He also received $2.75 million in "non-equity incentive plan compensation." The document described that payment as a performance-based incentive connected to Mezger's ability to limit losses. It could have paid as much as $10.5 million if the company had lost less money than it did.
Richard Ferlauto, director of corporate governance and pension investment for the American Federation of State, County and Municipal Employees, said Mezger's compensation was too generous and an example of how some corporate executives were overpaid.
"Historically, this company has figured out a way to line the pockets of its already super-rich executives," Ferlauto said of KB Home. "The pay package just shows the continuing deaf ear that compensation committees have to their shareholders and it indicates the degree to which the U.S. compensation model is broken."
KB Home shares lost about 42% of their value during fiscal 2008. The shares dropped 64 cents, or 6.7%, to $8.90 on Friday.
In its proxy filing, the company said it ended the year with more than $1.25 billion of cash, which it said exceeded company goals. The filing also said KB Home ended the year with lower overall debt "and market positions that we believe provide us with a solid foundation for growth as business conditions become more favorable."
The Associated Press was used in compiling this report.