The hot real estate market brought huge windfalls for the heads of U.S. home builders. But while the boom times are over, shareholder critics say CEO paychecks are not fully reflecting the gloom.

Already, chief executives' pay in the home building sector has declined as the housing market's fortunes have fallen. But activist investors say compensation is still too generous and not tied closely enough with company performance.

These guys made off like bandits during boom times, said Michael Garland, director of value strategies for the CtW Investment Group, an adviser to union pension funds. Now the market is in the tank, and shareholders have lost tens of billions, and these guys have walked away with their compensation.

Long critical of home builders' pay practices, activists are once again filing pay-related shareholder resolutions ahead of next year's annual meetings.

And this time they hope for stronger support from other investors, who may be more focused on governance matters after the bursting of the real estate market bubble wiped away billions of dollars in collective shareholder value at these companies.

My expectation here is that there is going to be a much more focused look at the home-building industry given what's happened, said Richard Metcalf, a corporate affairs director at the Laborers' International Union of North America.

The union, which has filed 2008 resolutions calling for pay reforms and other changes at a host of home builders, has a particular interest in the sector because many of its members work in it.

So far, Metcalf said, the Laborers' Union has filed proposals calling for improved pay-for-performance practices at D.R. Horton Inc, Lennar Corp and KB Home, as well as a resolution for the disclosure of a succession plan at luxury home builder Toll Brothers, where Chairman and CEO Robert Toll owns about 18 percent of the common stock, based on filings.

The union also has introduced measures calling for Ryland Group Inc and Beazer Homes USA Inc to reveal more about their lending arms' dealings in subprime and other risky types of mortgages.

Beazer awarded its CEO a $7.1 million bonus in the fiscal year that ended in September 2006. Soon after, the company disclosed a federal probe into its mortgage business, and last month it restated financial results going back to 2004 due to accounting problems.


CEOs in the building industry collectively earned hundreds of millions of dollars during the real estate boom, helped by a low-interest-rate environment that allowed many new home buyers to obtain financing.

For instance, Robert Toll, who has been one of the best paid chiefs in corporate America, received $92.3 million in salary, bonuses and nonequity incentive pay alone during the 2002-to-2005 period, according to data compiled by compensation services firm Inc.

Another high earner, MDC Holdings Inc CEO Larry Mizel, collected about $64 million during the same period, according to the data.

The figures do show declines in CEO pay at eight big builders -- Beazer, Centex Corp, D.R. Horton, Lennar, MDC Holdings, Pulte Homes Inc, Ryland and Toll -- in 2006 from the prior year. KB Home also paid its top official less, but comparisons are difficult because the company had appointed a new CEO in November 2006.

The figures include salary, bonus and nonequity incentives, but not extras like stock awards and restricted shares, which have the potential to add millions more to overall pay.

Nor do the year-over-year declines mean last year's payouts were small. Toll, for instance, saw his salary and bonus fall to $18.8 million from $28.6 million, but that was still more than double the $8.3 million that General Electric Co CEO Jeffrey Immelt received in bonus and salary in 2006.

At Toll Brothers, there is little expectation that the CEO will get a significant bonus, based on financial results through the first nine months of the fiscal year.

I doubt very much that the metrics would yield any significant bonus, Chief Financial Officer Joel Rassman said. It may not be any bonus.

Representatives of other home builders pointed to their last proxies for details on how compensation is calculated.

Centex, for instance, said in its filing that CEO Timothy Eller did not get any short-term incentive pay for the fiscal year ended on March 31 because the company reported an operating loss for the period. Eller took in $1.25 million in salary and earnings on deferred cash compensation, down from $11.5 million in the prior year.

More recent pay data will appear in annual proxy filings early next year for companies that report on a calendar-year basis. Investors will be paying close attention.

When you see their pay ramping up in good years, you want to see it ramping down in bad years, but my guess is that the dramatic increases will not be offset by dramatic decreases, said Bill Coleman, senior vice president of compensation at Pay goes down slower than it goes up.