Ara Hovnanian, CEO of New Jersey homebuilder Hovnanian Enterprises, got a $1 million bonus from his board and stock options worth $7.3 billion even as his company’s stock tanked 82 percent and he publicly begged Congress for help.
Through the fall, Hovnanian asked the feds to slash the mortgage rate by dumping federal dollars into the loan market and to enact a home buyer tax credit to pump up demand.
Both of these costly public requests are on track. An amendment in the current Senate stimulus bill would give home buyers a non-repayable $15,000 tax credit if they buy a principal home one year from passage and do not sell it for two years.
The Federal Reserve, meanwhile, has been pouring billions into the home loan market via Freddie Mac and Fannie Mae, trying to push the 30-year mortgage rate down to 4.5 percent or lower.
Hovnanian is compensated based on the company’s cash flow, said a spokesman, in an interview with Bloomberg. It ended the fiscal year in October with more cash, thus the bonus.
The millions in stock options are “worthless” due to the company’s performance, Chief Financial Officer Larry Sorsby said.
Hovnanian traded Friday morning at $1.73, down 82.45 percent over the past 12 months.
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