Despite a more than 30% decrease in overall compensation in 2014, Ara K. Hovnanian still earned a base salary of more than $1 million and total compensation close to $6 million.
11. Ara K.
Hovnanian, Hovnanian Enterprises
% Change Vs.
All Other Comp
Hovnanian’s base salary was unchanged from 2013
The non-equity incentive of $1,140,293 was based on
achieving targets for the company’s pre-tax profit based on its return on
average capital employed, capped at $2.5 million. “The CEO’s 2014 cash bonus
was entirely attributed to the Pre-tax Profit plus Liquidity Balances
Calculation Method of his bonus formula. Fiscal 2014 Pre-tax Profit was $26.6
million … and the Liquidity balances at the end of all four fiscal 2014 quarters
were above $170 million. As a result, Mr. Hovnanian earned a cash bonus equal
to $1,140,293, which represented a 24% decrease from his fiscal 2013 bonus.”
The $3,433,500 in stock awards reflects the grant date
fair value of the MSUs Hovnanian was granted in 2014. All told, 600,000 target
MSUs were given in 2014, same as in 2013 (though in 2013 it was made in the
form of stock options), but split into two incentive targets, subject to the
stock price and other financial performance conditions, of 300,000 shares. The
grant date fair value of the awards were $1,705,500 and $1,728,000.