Misbehaving CEOs can get off far too easily

Head of KB Homes faces small punishment for yelling profanities at neighbour Kathy Griffin

Misbehaving CEOs can get off far too easily

By Jennifer Saba

NEW YORK (Reuters Breakingviews) - Incivility never pays. But it doesn't always hurt, either. KB Home CEO Jeffrey Mezger’s crass rant at comedian Kathy Griffin, who lives next door, went viral. The board of the US$2-billion homebuilder cut his bonus by 25 per cent. That might hurt if it was a sure thing he'd actually receive one. A more fitting penalty would be to axe his haul of stock awards.

A security camera caught Mezger yelling sexist and homophobic profanities at Griffin and her boyfriend after they called the police to complain about noise in their Los Angeles gated community. The tape obtained by the Huffington Post made its way to social media. Celebrity financial adviser Suze Orman tweeted to her 1.6 million followers: "You really want to buy a home from this man?"

KB Home, which is one of the largest builders in the United States and prides itself on its sustainable and environmentally friendly houses, took swift action. On Thursday, the board chopped Mezger’s bonus for this year, and warned that future insalubrious conduct would result in his firing. The board called his behavior unacceptable and said it reflected negatively on the company.

The problem is, for the past two years Mezger didn’t receive a cash bonus, according to KB Home’s proxy statement. The last year he racked up the incentive was in 2014, for US$125,000. Mezger’s total compensation in 2016 was nearly US$9 million – mostly thanks to stock awards and non-equity incentive plan compensation. It would have been more meaningful if the board targeted those two areas.

Griffin was recently caught in a scandal of her own when she posed for a photograph holding the fake severed head of President Donald Trump. The comedian was quickly fired from CNN as host of its New Year’s Eve program with news anchor Anderson Cooper. Her national tour was canceled. Misbehaving CEOS, meanwhile, seem to get off more lightly.

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