Beazer Homes USA, Atlanta (NYSE:BZH) early Monday abruptly announced that Ian J. McCarthy, the company's president and CEO, had left the company. He is succeeded by CFO Allan Merrill, who was named president and CEO.
The company said only that McCarthy "is leaving the company and has resigned from the board of directors." McCarthy, who ran Beazer and its predecessor companies since 1991, entered into a settlement with the Securities and Exchange Commission in March in which he agreed to return his entire 2006 compensation, including $6.5 million in cash and 40,103 restricted stock units and 78,763 shares of restricted stock, to the company under section 304 of the Sarbanes-Oxley Act. That provision "requires reimbursement by cheif exectuvie officers and chief financial officers of certain compensation and stock sale sprofits they earned while their companies were in material non-compliance with financial reporting requirements due to misconduct." It was the third SEC enforcement action stemming from the results of an investigation into accounting misconduct at the company during the 2006 fiscal year.
Merrill was the driver behind Beazer's recapitalization effort as CFO for the past four years. The new CEO previously worked for Move, Inc. after working for 13 years for Dillon Read & Co. Inc., and its successors, including UBS, where he managed the firm's Housing, Construction and Building Materials group. In that capacity, Merrill was lead adviser to Beazer on its IPO in 1994 and on several acquisitions.
Succeeding Merrill as executive vp and CFO is Robert Salomon, a veteran home-building financial executive who was Beazer's chief accounting officer. Salomon joined Beazer in 2008 and has more than 25 years of financial management experience, including over 19 in the home-building industry. Prior to joining Beazer, Salomon was CFO and treasurer of Ashton Woods Homes for nearly 10 years, which he joined from M.D.C. Holdings (NYSE:MDC), where he held various accounting and finance positions over a 6 year period.
"Over many years Ian McCarthy has ably guided the company to its current position as one of the ten largest homebuilders in the United States," said Beazer Chairman Brian Beazer. "During this time, the homebuilding industry and the company have experienced many complex issues which Ian has dealt with to the benefit of the company. The board appreciates his leadership and many contributions to the company. For these efforts we would like to thank him and wish him all success in the future."
Of the new executive team, Beazer said, "We are pleased that Allan and Bob have accepted these appointments. Both possess many years of industry experience and have demonstrated a commitment to the success of our stakeholders." He added that the pair will "conduct a thorough review of the company's operations and potential growth opportunities."
David Golberg, home-building analyst at UBS, said in an investor note, "It is clear from our conversations with mgmt that increased focus will be placed on top line growth, as much of the low hanging fruit in terms of cost reductions has been realized. In our opinion, this reflects the continued dedication to improving operating leverage, especially as conditions normalize."