If you have been following D.R. Horton and the troubled home building industry, you might be wondering how a company that reported a net loss of more than $700 million in its most recent fiscal year can pay its top two executives nearly $1.6 million apiece in performance bonuses for that year.
The answer: Fort Worth-based Horton calculates and pays its bonuses quarterly, not annually. So, if the company makes money in a quarter, the executives earn bonuses, no matter what happens in the other reporting periods.
Hint: Click in map to explore connectionsStory continues below interactive map 
(requires Java)
The bonus formula is even more finely focused in the October-December period, according to the company’s annual proxy statement released last week. Then, executive bonuses are based solely on December. In effect, October and November don’t count.
Horton, one of the largest builders in the country, reported losses of more than $870 million in the last half of its 2007 fiscal year, ended Sept. 30, erasing profit from the first half.
Since 2001, chairman Donald Horton and CEO Donald Tomnitz each have received more than $45 million in bonuses. That includes a total of nearly $25 million apiece during the boom years of 2005 and 2006.
In fiscal 2007, bonuses were based on consolidated pre-tax income. At its annual meeting Jan. 31, the company is asking shareholders to approve compensation plan modifications that, in part, also factor in cost containment and operating cash flow.
Click here to sign up for the Muckety Newsletter
0 Comments
There are no comments yet, be the first by filling in the form below.
Leave a Comment