Little more than $7 million will close the door on the seven-year options backdating scandal at KB Home. Former KB CEO Bruce Karatz agreed to pay roughly $6.7 million to the company and $480,000 to the U.S. Treasury to atone for his part in manipulating stock option grant dates for his monetary benefit, the Treasury Department reported yesterday. The corporate chicanery ultimately cost Karatz his 30-year legacy at the Los Angeles-based builder, as then-COO Jeffrey Mezger was ushered into the top seat in the days following the scandal's eruption.

Karatz's attorney told the Los Angeles Times yesterday, "Bruce is pleased to be able to put this matter behind him and is looking forward to focusing on the next chapter in his life."

Karatz's immediate next chapter will not include serving as an officer or a director of a public company; he is forbidden to do so for a period of five years.

KB Home became the first home building offender in one of the latest scandals sweeping corporate America in November 2006 after an internal investigation revealed that Karatz, along with head of human resources Gary Ray, cherry picked option grant dates to boost compensation between 1998 and 2005. The internal investigation was followed by Department of Justice and Securities and Exchange Commission probes.

Karatz initially gave back $13 million in profits from the improper backdating.

The scandal cost the company roughly $41 million in non-cash compensation expense, $60 million in equity, and $15 million in additional income tax provisions--excluding the ancillary costs associated with the investigation, audit, and restatement of earnings documents.

Moreover, the offense landed the company at the heart of the pay-for-performance debate over CEO compensation. Karatz had long been known for his beefy compensation packages, heavy in stock options and more tied to volume versus profitability. During 2005, Karatz's last full year serving as CEO, Karatz enjoyed a total compensation of $38.8 million, making him the year's 20th ranked CEO in pay, according to Forbes. In fact, Karatz's total annual compensation eclipsed that of CEOs of similarly sized companies by roughly 20%.