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Two top Beazer Homes executives have agreed to pay their bonuses from last year into the $50 million restitution fund the homebuilder is establishing for victims of its predatory lending practices, according to company filings.
Ian McCarthy, president and chief executive officer, and Michael Furlow, executive vice president and chief operating officer, have contributed the after-tax proceeds of their 2008 bonuses “in recognition of the financial challenges currently facing the Company,” Beazer said. The money will be used to defray the company's payments into the fund.
Securities filings show McCarthy's bonus was $600,000 last year, before taxes, in addition to his $1.2 million salary and $223,000 in other compensation. Furlow's bonus was $400,000, pre-tax, in addition to his $800,000 salary and $112,000 in other compensation.
The homebuilder has lost money for the last 10 quarters, including a $952 million annual loss in 2008.
The compensation committee of Beazer's board of directors has said in securities filings that the executives' bonuses “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 against criteria supporting specific Company objectives appropriate to the current downturn in housing.”
Federal investigators on Wednesday filed mortgage and accounting fraud charges against Beazer, but the company will escape prosecution because it accepted responsibility for its actions and agreed to pay $50 million to victims.
The settlement wrapped up a two-year federal investigation, sparked by an Observer series in 2007, which found that Beazer, once a major Charlotte-area homebuilder, used aggressive sales tactics that contributed to an unusually high foreclosure rate in many of its local starter-home communities.
