A construction union pension fund, a shareholder in home builder Toll Brothers Inc., is asking fellow shareholders to join in withholding votes to reelect the company’s chairman and CEO, and to reject his proposed salary bonus plan.
The Laborers’ International Union of North America charged that the company has exhibited poor corporate governance practices and that its leaders have failed company shareholders.
Frederick N. Cooper, a Toll Brothers spokesman, said company officials are familiar with the letter that the union pension fund has disseminated to shareholders “and we are reviewing it.”
Toll Brothers this month reported its revenue in the first quarter of the current fiscal year was $842.7 million, down from $1.09 billion in first-quarter 2007. The company had net contracts valued at $375.3 million in the first quarter, down 50 percent compared to the value of contracts in first-quarter 2007.
“The housing market remains very weak in most areas. Based on current traffic and deposits, we are not yet seeing much light at the end of the tunnel,” said Robert I. Toll, company chairman and CEO, in a statement.
Joel H. Rassman, the company’s chief financial officer, stated in the company’s preliminary earnings announcement, “With conditions still weak in most markets, we expect to continue to face challenging times ahead.” He said the company estimates that pre-tax write-downs in the first quarter will be between $150 million and $300 million.
“At a time when Toll Brothers’ shareholders have seen a stock-price decline of 50 percent over the last three years and 35 percent in just the last year, the people responsible for the company’s decline need to be held accountable,” stated Terence M. O’Sullivan, general president for the laborers’ union. The union represents about 500,000 construction industry workers.
Last year, the union pension fund voiced worries about Toll Brothers’ executive compensation practices, and the union has engaged in a larger effort last fall that seeks to protect workers’ pension funds.
That effort, according to the announcement, includes shareholder proposals filed with companies in the home-building and mortgage industry that requires increased mortgage practices disclosure, reduces conflicts of interest at credit rating agencies, and addresses CEO succession planning.
Inman News reported in November that an investment group affiliated with a coalition of unions called for the removal of Beazer Homes CEO Ian McCarthy, for example.
Sullivan stated in the announcement that about 200,000 construction workers lost their jobs in 2007, while million of homeowners could face foreclosure “and hundreds of billions of dollars of shareholder value have been lost.”