A leading proxy advisory firm is recommending that Toll Brothers shareholders vote against a proposal that would ensure that the company's top three executives would receive cash incentive awards even as the company is losing money.

Proxy Governance, based in Vienna, Va., is urging shareholders to vote against the plan during the big builder's annual meeting March 12.

Toll Brothers reported a $96 million loss last week in its fiscal 2008 first-quarter compared to a $54 million profit during the same period last year. The fiscal first-quarter loss was the company's second losing quarter in a row. Toll took an $81.8 million loss in the fourth-quarter of 2007. Toll Brothers was one of the few big builders to report a profit in 2007, recording net income of $35.7 million on $4.6 billion in revenues.

Proxy Governance found that the average three-year compensation paid to CEO Bob Toll is 265 percent above the median paid to CEOs at peer companies. In addition, the average three-year compensation paid to COO Zvi Barzilay and CFO Joel Rassman was 83 percent above the median paid to similar executives at peer companies.

According to Proxy Governance, Toll's high pay is attributable to cash incentives previously awarded under the company's Cash Bonus Plan in 2005 and 2006 when he received bonus awards of $27.3 million and $17.5 million respectively. His total compensation in 2006 was $38.3 million. Toll took a pay cut in 2007 of $7.1 million with no bonus.

"We note the company's recent compensation practices that have led to excessive cash incentive awards for CEO Bob Toll, and recognize that it appears that the company has introduced this proposal as a way to ensure that Bob Toll receives a cash incentive even when the company performance is suffering," said Proxy Governance in its report.

"Given such compensation history, we recommend that shareholders vote against this plan."

When asked to comment on the recommendations from Proxy Governance, Toll Brothers responded by email: "We have just received the recommendations of Proxy Governance and are reviewing them."