Industry News

KB Home CEO steps down after stock-options probe

Scandal spreads to more than 30 companies

KB Home, one of the largest home builders in the country, said its chief executive officer Bruce Karatz has resigned, the latest among dozens of executives to leave publicly traded companies in a widening stock-options scandal. Karatz, who has led the building company for 34 years, agreed to pay $13 million to KB Home after an investigation found that the Los Angeles-based company had incorrectly reported stock-options grants, according to a statement released Sunday. Jeffrey T. Mezger will replace Karatz as president, CEO and a director, the company said. The investigation found that the company used incorrect measurement dates for annual stock-option grants from 1998-2005. In an announcement, KB Home said it "expects that the incremental non-cash compensation expense arising from these errors is not likely to exceed and aggregate of $50 million, spread over the vesting periods of the options in question." The errors may also require an increased tax provision, and KB Home along with...

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