In advance of an expected dismal fourth-quarter earnings release on Thursday, Nov. 8, WCI Communities announced a corporate restructuring that cuts 575 jobs on Nov. 7, and that its board, including billionaire financier Carl Icahn, has agreed to reduced or zero compensation through 2008.
"This prolonged downturn requires that we continue to assess our overhead and make reductions in order to remain viable through the trough of this cycle," said president and CEO Jerry Starkey. "We have been fortunate to retain the talent needed to navigate this tough time in the industry, and we believe we have the key leaders in place to respond to increased demand--whenever that may occur."
The job cuts reduce the company's workforce to approximately 2,100 employees, a 46% reduction from its peak of 3,889 in mid-2006.
Under the reorganization, David Fry, who is now in charge of the company's traditional home building, real estate services, and amenities business lines will become COO and take over the Florida tower building operation. Christopher J. Hanlon, a senior vice president and COO of the company's tower divisions, recently announced his impending resignation.
Under the new structure, the Northeast and Mid-Atlantic traditional home building regions will be combined and report to Fry, while the Northeast and Mid-Atlantic tower home building divisions will be combined and report directly to Starkey.
The company expects the job cuts will save $46 million a year, but costs are estimated at $5.4 million, with $1 million spent in the third quarter and the remainder in the fourth quarter of this year.
Six company board members who represent the largest shareholders have agreed to work for free for the rest of 2007 and all of 2008: Don E. Ackerman, Nicholas Graziano, Carl Icahn, Keith Meister, David Schechter, Craig Thomas, and Charles E. Cobb, Jr. Hilliard M. Eure, III, chairman of the audit committee, and Jonathan Macey agreed to receive $50,000 in cash on a quarterly basis for the rest of 2007 and all of 2008 in lieu of their regular compensation.
WCI, which has most of its operations in Florida, has been particularly hard hit by the market slowdown with a large number of cancellations. The company's tower building division, which mostly includes high-end luxury units, has been extremely slow in finishing and closing out towers.