Atlanta' s Beazer Homes USA will pay fired CEO Ian McCarthy $5.2 million over three years, plus continuing medical coverage, $10,000 for legal fees and other compensation, documents filed late Tuesday show.
McCarthy led the home-building company when it was the target of a federal investigation for mortgage fraud that ended in 2009, with Beazer agreeing to pay $55 million in restitution. The CEO's departure came three months after he repaid $6.5 million and gave up company stock because the Securities and Exchange Commission said he was overcompensated during a time when Beazer filed false financial statements.
"In light of all that, it's quite a payday for him," said stock analyst Vicki Bryan, who tracks home builders for Gimmie Credit in New York.
The real-estate market crash and other factors have driven Beazer's stock price down 96 percent from its 2006 peak to $3.23 per share on Wednesday, Bryan said.
Home builders nationwide have been hurt significantly by the faltering economy, with foreclosures and short sales competing for buyers' dollars and helping drive home prices to 1999 levels, according to the Case-Shiller home price index.
Information released Wednesday from the National Association of Home Builders said home builders' confidence in the industry dropped this month.
"Builders are being squeezed by the continuing weakness in existing home prices against which they must compete, as well as rising material costs," said NAHB Chairman Bob Nielsen. "In addition to the ongoing impacts of distressed property sales on home prices, appraisal values and consumer confidence, rising costs for materials such as roofing, copper, wallboard, vinyl siding and other components have made it extremely difficult to construct a new home and sell it at a price that covers the costs."
On Monday, Beazer announced management changes, among them McCarthy's departure, without offering a reason.A company spokeswoman later told The Associated Press the CEO had been terminated. Calls to Beazer were not returned.
The company has named former Chief Financial Officer Allan Merrill as president and CEO.
Bryan said, "There is nothing to indicate yet the company is going to make a significant change other than put the finance guy in charge, not an operational guy. This is not a guy who builds homes for a living."
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