Home Builder “Named Executive Officer” Compensation Rankings–Round One
We continue our analysis of the compensation packages of the public home building companies, nine of which have so far disclosed details of “named executive officer” compensation in their proxy statements.
Earlier, we posted a look at CEO compensation rankings for the nine companies–Beazer Homes, D.R. Horton, Hovnanian, KB Home, Lennar, M.D.C. Holdings, NVR Homes, Ryland Homes, and Toll Brothers.
Here, we compare each company’s 2009 “Named Executive Officer” compensation with the 2010 group. In some cases, companies added to the crop of “Named Executive Officers” and in others, such as M.D.C., NVR, Ryland, and Toll Brothers, executives who left their positions during the course of 2010 were succeeded by others during that 12-month period.
Now, sitting down?
The 43 “Named Executive Officers” in our grouping of nine companies who’ve posted their proxy statements with the Securities and Exchange Commission, earned a total of $182.6 million in 2010, conditioned, in some cases on what happens to stock prices across subsequent earn-out years.
That $182.6 million compares with $112.2 million in 2009 for the same companies’ groups of “Named Executive Officers,” an increase in 2010 of 62.8%. Of, course there are apples to oranges caveats in comparing year to year, especially since there are executives brand new to the roster in 2010, and some who served partial year’s service in each of the years.
However, when you look at it collectively, you’d assume from the 2009 to 2010 comparison that boards of directors, compensation committees, and shareholders–on the whole–agree that public home building executive managements did a significantly better job last year than the year earlier.
Cribbed from the D.R. Horton proxy, compensation plans generally hammer on the fact that executive pay is performance and merit-based; conditioned on both individual and company performance, and keyed to both short- and long-term stakeholder value generation and risk mitigation. Horton says its compensation objectives are:
- attract, motivate and retain highly qualified and experienced executives;
- award compensation that motivates and recognizes valuable, short and long-term individual and company performance;
- provide a compensation program that is competitive with our peer group; and
- implement a compensation plan that aligns the executive’s interests with those of our stockholders.
In the absence–mostly–of significant profitability achievements, compensation committees pegged bonus pay to other financial value creation metrics ranging from revenue and home building unit benchmarks, to cash generation, to debt reduction, all the way across the spectrum to mitigating value dilution and avoiding the worst of legal consequences.
Each of the management teams had its adversity management task cut out for it, and yardsticks for individual and company-wide gains certainly dwelled in the realm of the relative–one that will probably apply for 2011 compensation as well.
So, without more ado, here’s the roster of our basket of nine companies’ Named Executive Officer compensation, ranked in order of 2010 total comp for each group.
As more companies file their proxy statements with the SEC, we’ll make the list and ranking more complete, and add commentary to boot.