Executive Compensation Downsized at Builder NVR

The sky-high compensation at home builder NVR Inc. came crashing back to earth in last year.

Chief Executive Paul C. Saville earned total compensation of $807,850 in 2011, down from nearly $31 million in 2010, according to a filing with the Securities and Exchange Commission.

While Mr. Saville’s salary was frozen at $800,000 for the fifth consecutive year, he didn’t receive any of the stock or option awards — $14.8 million of each — that boosted 2010’s salary.

NVR, which rarely comments to the press, wasn’t immediately available to comment on the filing.

It should be no surprise that the compensation — which was compared to that of a big-bank CEO — made Mr. Saville the highest-paid executive in home-builder land and one of the most rewarded executives in the nation two years ago.

To be sure, some in the industry defended his compensation, pointing out that the company, among the nation’s largest builders, was one of the few residential players to make money during the housing crisis. Morningstar has previously labeled NVR “one of the greatest shareholder wealth creators we’ve ever come across.”

But the company’s superstar performance has weakened. Its fourth-quarter earnings tumbled 45%, depressed by fewer home sales and lower earnings at its mortgage-banking business. The shares have returned just 7.2% this year, making it the building sector’s smallest gainer.

NVR was also one of the few builders to receive a negative ‘say on pay’ vote from shareholders related to 2010 compensation, indicating investors were unhappy with the pay structure. (The company met with some shareholders and its Compensation Committee is “reevaluating our compensation philosophy and practices,” according to the filing.)

Such factors could help explain this year’s downsized compensation for multiple executives. Principal Financial Officer Dennis M. Seremet saw is total compensation drop from $13.3 million in 2010 to $482,850 last year, while Robert W. Henley, the principal accounting officer, saw total compensation fall from more than $6 million to $258,858.

Messrs. Saville and Seremet even turned some money down: They earned bonuses of $46,289 and $27,484, respectively, for 2011, but they “each recommended to the Compensation Committee that no bonuses be paid to them,” according to a filing footnote. The Committee approved the request.

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