KB Home said Thursday that it will pay Chief Executive Jeffrey Metzger an annual salary of $1 million, far less than predecessor Bruce Karatz.

The Los Angeles homebuilder also said its board is reviewing overall executive compensation policy and will announce other elements of Metzger's pay package next month when it completes the review, the company said in a regulatory filing.

Mezger, formerly the company's chief operating officer, earned $500,000 in salary, plus a $2.5 million bonus in fiscal 2005, according to a filing by KB.

Karatz, who left in November amid a stock options review by the Securities and Exchange Commission, was paid $232.6 million in compensation in the three years before he retired and is due to get a severance payment of $175 million.

KB will restate its financial results for fiscal years 2003, 2004 and 2005 as a result of the finding of the options investigation.

Shares in KB were down $2.05 to $51.76 in midday trading Thursday.

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