The Atlanta Journal-Constitution
Tuesday, December 23, 2008
After a year in which its losses soared 131 percent to more than $951 million, Beazer Homes doled out $1.4 million in bonuses to its top three executives.
Ian McCarthy, CEO of the struggling Atlanta-based builder, received a $600,000 bonus. McCarthy’s base pay is $1.2 million.
Executive Vice President and Chief Operating Officer Michael Furlow was awarded $400,000, 50 percent of his base pay.
And Executive Vice President and Chief Financial Officer Allan Merrill received $400,000. Merrill’s base pay is $600,000.
“These awards were appropriate in light of the importance of having met the performance targets and the need to continue to motivate our executives by tying compensation to individual performance,” Beazer says in a Securities and Exchange Commission filing.
Merrill’s bonus includes $100,000 “in light of his efforts in completing a restatement of the company’s financial statements.” In May, Beazer released several periods of restated earnings after an internal investigation found “accounting errors and irregularities.”
The bonuses were for fiscal year 2008, which ended Sept. 30. During those 12 months, Beazer’s losses grew from $411.1 million to $951.9 million. Its stock price fell 27 percent to less than $6.
Low consumer confidence, falling prices, high levels of unsold homes and more restrictive lending are all hurting home sales, Beazer says. Completed sales contracts plummeted 38 percent compared to fiscal year 2007.
Analyst Vicki Bryan of Gimme Credit said in a newsletter this month Beazer may collapse.
“We don’t think the company can sustain itself through 2009 much less for another two to three years before the home-building sector might begin to recover,” Bryan writes. “Inventory at $1.5 billion no longer covers the $1.75 billion in debt, and this value is likely to drop further with additional impairment charges.”
She goes on to say: “Beazer’s cash is threatened by more than just its failing business. There could be expensive settlements as a result of federal and state investigations into Beazer’s mortgage lending practices, more than a year after it admitted to pressuring buyers into mortgages they couldn’t afford.
“In addition, Beazer could be held liable for losses suffered by buyers of an estimated $10 billion in loans originated by [the now defunct] Beazer Mortgage since 2000.”
The company is under investigation following complaints about an inordinate number of foreclosures in the Charlotte area.
Beazer said the latest bonuses were based primarily on the ability to meet targets for home closings, gross earnings and cash flow in a difficult market. Another factor was customer satisfaction.
The company is working to cut its expenses and inventory and boost its cash position. It ended the fourth quarter with $584.3 million, up from $454.3 million a year earlier.
Beazer now employs about 1,400 people after cutting its workforce by 45 percent, or 1,175 employees, in fiscal year 2008.
No comments:
Post a Comment