CtW Investment Group which is affiliated with Change to Win, a group of unions representing 6 million workers, has called for the removal of Beazer Homes USA Chief Executive Officer Ian McCarthy for his “stunning leadership failure.” In a letter to Laurent Albert, the Chairman of Beazer’s Nominating/Corporate Governance Committee, CtW states that a “decisive action by Beazer’s independent directors is required to restore investor, creditor, customer and regulatory confidence.”
Specifically, CtW claims that Mr. McCarthy has failed to give shareholders long term value, while garnering egregious compensation of more than $57 million over the past five years and “allowing his management team to violate federal law, improperly account for land development costs and sale-leaseback transactions, and provide undisclosed loans to executives.” Further, CtW argues that the Company’s failure to hold Mr. McCarthy accountable shows “a troubling lack of independent leadership.”
Indeed, CtW questions the independence of Beazer’s “non-executive” chairman Brian Beazer and believes that Mr. Beazer is really acting “more like an adjunct CEO.” For example, Mr. Beazer’s longstanding relationship with Mr. McCarthy dates back nearly 30 years. Moreover, in 2006, while other non-employee directors in the Company “received $35,000 plus $1,500 per board meeting, with an additional $5,000 for committee chairs,” Mr. Beazer received $225,000 in base salary, 2,500 stock options and 2,000 restricted shares under the Company’s Stock Incentive Plans. As such, Institutional Shareholders Services classified Mr. Beazer’s annual salary as one of “‘the most highly compensated officers of the company.”
CtW demands that the Company replaces Mr. McCarthy; names an independent board chairman; and establishes a Legal and Regulatory Compliance Committee to restore the Company’s credibility.
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