CFO Merrill named new CEO after McCarthy resigns.
Beazer Homes USA abruptly announced June 13 that Ian J. McCarthy, the company's longtime president and CEO, had left the company. He was succeeded by CFO Allan Merrill.
"This was very much a board-driven decision," said Carey Phelps, the company's director of investor relations, in an interview with Big Builder's sister publication Builder. "They are looking to the future, to the objective of returning the company to profitability."
McCarthy, who ran Beazer since 1991, recently entered into a settlement with the Securities and Exchange Commission in March, in which he agreed to return his entire 2006 compensation of $6.5 million in cash, including $772,232 in profit from stock sales and more than 78,000 shares of restricted stock, to the company under Section 304 of the Sarbanes-Oxley Act.
That provision requires executives to return compensation earned "while their companies were in material noncompliance with financial reporting requirements due to misconduct."
It was the third SEC enforcement action stemming from an investigation into accounting misconduct at the company during the 2006 fiscal year.
As CFO for the past four years, Merrill was the driver behind Beazer's major recapitalization effort. The new CEO previously worked for Move, Inc., after working for 13 years for Dillon Read & Co. and its successors, including UBS, where he managed the firm's Housing, Construction, and Building Materials group. In that capacity, Merrill had been lead adviser to Beazer on its IPO in 1994.
Robert Salomon will replace Merrill as executive vice president and CFO. Salomon joined Beazer in 2008 and has more than 25 years of financial management experience at building firms such as Ashton Woods Homes and M.D.C. Holdings.
"Over many years, Ian McCarthy has ably guided the company to its current position as one of the 10 largest home builders in the United States," said Beazer chairman Brian Beazer in a statement. "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."
UBS analyst David Goldberg said in an investor note, "It is clear from our conversations with management 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." ?William Gloede, with additional reporting by Teresa Burney