Industry News

KB Home CEO steps down after stock-options probe

Scandal spreads to more than 30 companies

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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...