LOS ANGELES, CA - KB Home (NYSE:KBH) has reported the approval of long-term incentive awards for its executive officers, as detailed in a Form 8-K filing with the Securities and Exchange Commission on Tuesday. The management development and compensation committee of the board of directors granted these awards on Monday, under the Amended and Restated KB Home 2014 Equity Incentive Plan.
The incentive awards consist of performance-based restricted stock units (PSUs) which will be vested based on the achievement of specific performance goals over a three-year period from December 1, 2024, to November 30, 2027. The goals include cumulative adjusted earnings per share, average adjusted return on invested capital, and revenue growth compared to a peer group of high-production public homebuilding companies.
The PSUs are designed to provide between 0% to 200% of the target award amount of KB Home common stock shares, depending on the company's performance against the established metrics. The final number of shares issued to each executive will be determined by the company's performance, with 40% based on earnings per share, 35% on return on invested capital, and 25% on relative revenue growth.
The executives eligible for the PSU awards include Robert V. McGibney, Jeffrey T. Mezger, Albert Z. Praw, and Brian J. Woram, with respective Award Shares of 37,589, 90,214, 11,903, and 11,903. In addition to the stock awards, recipients are entitled to a cash payment equivalent to the dividends they would have earned on the shares within the performance period.
In other recent news, KB Home has seen significant developments. The company has welcomed Cheryl J. Henry, former CEO of Ruth's Hospitality (NASDAQ:RUTH), to its Board of Directors. Her term is set to conclude at the 2025 Annual Meeting of Stockholders. In addition, KB Home's Chief Financial Officer, Jeff Kaminski, has announced his retirement set for early 2025. Kaminski, who has been with the company for over 14 years, will assist in transitioning his responsibilities until the filing of the company's 2024 Annual Report.
KB Home also reported robust financial results for the third quarter of fiscal 2024, with revenues exceeding $1.75 billion and diluted earnings per share of $2.04, despite falling short of BTIG's estimate. The quarter saw an 8% increase in home deliveries, reflecting strong market demand. However, the company's third-quarter earnings were slightly impacted by reduced gross margins and average selling prices. BTIG maintained a neutral rating on KB Home following these results and adjusted its full-year 2024 EPS estimate for KB Home downward to $8.43 from the previous $8.55. Yet, the firm raised its FY25 EPS estimate for KB Home to $8.95 from $8.60, factoring in the company's revenue goal of $7.5 billion for fiscal year 2025.
Lastly, KB Home continues to demonstrate a commitment to growth through significant investments in land acquisition and development, and a comprehensive share repurchase program. Despite a 15% year-over-year decrease in backlog, the company's management maintains a healthy liquidity position of $1.46 billion, indicating a cautiously optimistic outlook for the future. These are recent developments in the company's business operations.
InvestingPro Insights
KB Home's recent approval of long-term incentive awards for its executive officers aligns with the company's strong financial performance and shareholder-focused strategies. According to InvestingPro data, KB Home has demonstrated impressive results with a market capitalization of $6.07 billion and a robust revenue of $6.60 billion over the last twelve months as of Q3 2024. The company's commitment to shareholder value is further evidenced by its aggressive share buyback program, as highlighted by an InvestingPro Tip.
The newly approved performance-based restricted stock units (PSUs) are designed to motivate executives based on key metrics such as earnings per share, return on invested capital, and revenue growth. This approach is supported by KB Home's solid financial position, with InvestingPro data showing a healthy P/E ratio of 9.85 and an operating income margin of 11.64% for the same period. Additionally, an InvestingPro Tip notes that KB Home has maintained dividend payments for 39 consecutive years, underlining its consistent focus on shareholder returns.
The company's strong performance is also reflected in its stock price, with InvestingPro data indicating a remarkable 87.78% total return over the past year. This aligns with another InvestingPro Tip suggesting that KB Home has delivered high returns over the last year and decade.
For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips for KB Home, providing deeper insights into the company's financial health and market position.
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