KB Home Investors Challenge Exec Pay

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To get a sense of the struggles at KB Home, look no further than the second quarter loss it reported this summer.

Executives hailed the $24 million hit, stressing that the figure was less than half that of a year earlier and an indication the Westwood homebuilder was on its way back to profitability. But the loss also highlighted just how much the company continues to trail rival homebuilders, which already are making profits as the housing market rebounds from the crash.

The company’s performance has spilled over into shareholder anger over executive pay. A majority of shareholders, upset that executives received millions in cash incentives after meeting low performance targets, voted against executive compensation packages in a nonbinding “say on pay” vote earlier this year. A shareholder derivative lawsuit was filed this month.

The lawsuit filed in Los Angeles Superior Court seeks to block the compensation packages on behalf of shareholders. But Carla Feldman, an attorney at Arent Fox LLP in downtown Los Angeles who reviewed the shareholder lawsuit for the Business Journal, said the investors face an uphill battle in court.

Read the full story in the August 27 issue of the Business Journal.

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