Jeffrey Mezger
KB HOMEAbout Jeffrey Mezger
Jeffrey T. Mezger (age 69) is Chairman and Chief Executive Officer of KB Home, serving as CEO since November 2006 and Chairman since 2016; he has been a director since 2006 and joined KB Home in 1993 . Under his leadership, FY2024 results included revenues of $6.93B (+8% YoY), diluted EPS of $8.45 (+20%), and ROE of 16.6%; one-year TSR was ~61% (75th percentile vs peers) . Over 2019–2024, revenues rose 52%, net income and EPS each rose 144%/196% respectively, book value per share rose 112%, and debt-to-capital improved from 42.3% to 29.4% . He holds no other public company directorships; external roles include policy advisory boards at UC Berkeley’s Fisher Center and Harvard’s Joint Center for Housing Studies .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| KB Home | Chairman of the Board | 2016–present | Combined Chair/CEO role endorsed by board for strategic cohesion; balanced by strong Lead Independent Director . |
| KB Home | Chief Executive Officer | 2006–present | Led Built-to-Order strategy, cost/productivity initiatives, land discipline, and capital returns . |
| KB Home | President & CEO | 2006–2024 (President through Feb 2024) | Drove growth, profitability, and industry-leading sustainability . |
| KB Home | EVP & Chief Operating Officer | 1999–2006 | Operational leadership across divisions . |
| KB Home | Southwest Region leadership (Division President AZ; SVP & Regional GM AZ/NV) | 1995–1999 | Regional expansion and execution . |
| KB Home | President, Antelope Valley Division | 1993–1995 | Division growth and market entry . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| UC Berkeley Haas, Fisher Center for Real Estate & Urban Economics | Policy Advisory Board Member | 2010–present | Industry insights and policy engagement . |
| Harvard Joint Center for Housing Studies | Policy Advisory Board Member; Board Chair (2015–2016) | 2004–present | Housing policy and market research input . |
| Leading Builders of America | Founding Chairman; Executive Committee Member | 2009–2016 | Industry advocacy and standards . |
| USC Lusk Center for Real Estate | Executive Board Member | 2000–2018 | Real estate academic-industry linkage . |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 1,150,000 | 1,150,000 | 1,150,000 |
| Target Bonus (% of Base) | 225% | 225% | 225% |
| Director Fees | Not paid for Board service | Not paid for Board service | Not paid for Board service |
Performance Compensation
Annual Incentive – Structure and FY2024 Outcomes
- Program design: Two components—Adjusted Pretax Income (API) vs goals; and an Asset Efficiency pool funded above a minimum asset efficiency hurdle (Return on Inventory) with allocations via a structured scorecard (IPF) .
- Cash cap: Cash payouts limited; CEO’s payout partially paid in 3-year ratable time-vesting restricted stock in lieu of cash .
| Component (FY2024) | Weighting | Target | Actual | Payout/Notes | Vesting |
|---|---|---|---|---|---|
| API vs Goals | Formula-based | $700.0m API | $937.0m API | 100% of target for this component | Cash within program limits |
| Asset Efficiency Pool | Pool funding at 2.25%/3.25% tiers above hurdle | Hurdle: $159.9m (3% ROI) | Pool funded up to ~$19.2m | CEO IPF: 27.2%; CEO component payout $5,208,202 | Portion paid in restricted stock in lieu of cash |
| CEO Total Annual Incentive | — | — | — | $7,795,702 total; $6,295,702 cash + $1,500,000 restricted stock | RS vests in 3 equal installments beginning Jan 25, 2026 |
Long-Term Incentives (PSUs)
- Measures/weights: AEPS 40%; AROIC 35%; Relative Revenue Growth vs peers 25% .
- 2024 PSU grant: 90,214 target shares (performance period Dec 1, 2024–Nov 30, 2027). Goal grid: AEPS ($12.40/$15.50/$18.60) and AROIC (7.5%/9.4%/11.3%) at threshold/target/maximum .
- 2021 PSU payout (covering Dec 1, 2021–Nov 30, 2024): Certified at 180% of target; CEO received 228,949 shares .
| PSU Item | Details |
|---|---|
| 2024 Grant (target) | 90,214 PSUs; 0–200% payout range; period 12/1/2024–11/30/2027 |
| 2024 Goal Levels | AEPS: $12.40/$15.50/$18.60; AROIC: 7.5%/9.4%/11.3% (T/Target/Max) |
| 2021 PSU Payout | 180% of target; CEO actual 228,949 shares (certified 2/21/2025) |
Equity Ownership & Alignment
| Ownership/Equity Item | Detail |
|---|---|
| Total Beneficial Ownership | 2,042,726 shares (includes 60,631 time-vesting restricted shares); 2.9% of outstanding shares . |
| Options | 274,952 options exercisable; strike $16.21; exp. 10/6/2026 . |
| Unearned PSUs at 11/30/2024 | 166,003 (2022 grant); 124,717 (2023 grant); 90,214 (2024 grant) . |
| Restricted Stock (recent awards) | 22,150 shares granted 1/23/2025 (portion of 2024 incentive); 3-year ratable vesting beginning 1/25/2026 . |
| Hedging/Pledging | Prohibited for employees and directors (no pledging or hedging KBH stock) . |
| Stock Ownership Guideline | CEO: 6x base salary; in compliance . |
Vesting/Transactions (Selling Pressure Indicators)
| Event | Date | Shares | Value/Notes |
|---|---|---|---|
| Options exercised (CEO) | FY2024 | 333,000 | $14,877,632 value realized . |
| PSUs vested (2021 grant payout) | 2/21/2025 | 249,121 (CEO acquired on vesting in FY2024 table) | $15,262,565 value realized (includes dividend equivalents) . |
| CEO Restricted Stock (in lieu of 2024 cash) | 1/23/2025 | 22,150 | $1,500,000 grant; vests over 3 years from 1/25/2026 . |
Employment Terms
| Provision | CEO Terms |
|---|---|
| Severance (Without Cause / Good Reason) | 2.0x (base salary + 3-year avg annual bonus), capped at $6.0m; prorated bonus for year of termination; 24 months health benefits; non-solicit 2 years; release, non-disparagement, confidentiality required . |
| Change-in-Control (CIC) | 3.0x (base + 3-year avg bonus), capped at $12.0m; 24 months health benefits; lump-sum vesting/payment of deferred comp/retirement per arrangements; additional amount to compensate for any 280G excise taxes (CEO) . |
| Equity Vesting on CIC | Double-trigger; target or prorated payout depending on timing; no acceleration absent qualifying termination within 18 months . |
| Retirement Plan (closed to new participants) | Present value of accumulated benefit: $11,480,010 at 11/30/2024; original annual benefit $450,000 for 20 years; lump sum on CIC or death per plan . |
| Death Benefits | DBO Plan: $1,000,000 death benefit plus tax restoration; additional $400,000 term life policy . |
| Clawback | NYSE-compliant incentive compensation recovery policy adopted/updated (2023) . |
Board Governance
- Board service: Director since 2006; Chairman since 2016; CEO since 2006 .
- Dual-role implications: Board affirms combined Chair/CEO enhances strategic execution; mitigated by empowered Lead Independent Director (Jodeen Kozlak since 2024) with defined authorities, and all committees composed solely of independent directors .
- Meetings/attendance: In 2024, Board held 4 meetings; each incumbent director standing for election attended at least 75% of total Board and committee meetings; executive sessions held each regular meeting .
- Independence: All directors other than the CEO are independent; Mezger is not independent .
Director Compensation (as a Director)
- Mezger receives no additional pay for Board service; non-employee director program excludes CEO .
Say‑on‑Pay & Shareholder Feedback
- 2024 SOP support: 81% (improved vs prior year); changes included structured scorecard methodology, cash caps on annual incentives, and shifting larger CEO incentive portion to equity .
- 2023 SOP support: ~80%; similar responsiveness actions disclosed .
Compensation & Peer Group Framework
- Compensation consultant: Frederic W. Cook & Co. retained by Compensation Committee; determined independent; advises on executive and director compensation .
- Peer group (updated Oct 2024): Beazer, Century Communities, D.R. Horton, Hovnanian, Lennar, Meritage, NVR, M/I Homes, Pulte, Taylor Morrison, Toll Brothers, Tri Pointe; KBH positioned ~50th percentile by revenue; market cap ~43rd percentile .
Performance & Track Record
FY2019 vs FY2024 Performance Snapshot
| Metric | FY2019 | FY2024 |
|---|---|---|
| Total Revenues ($B) | 4.55 | 6.93 |
| Net Income ($M) | 268.8 | 655.0 |
| Diluted EPS ($) | 2.85 | 8.45 |
| Book Value/Share ($) | 26.60 | 56.27 |
| Debt to Capital (%) | 42.3% | 29.4% |
Additional FY2024 highlights: returned >$420M to shareholders (repurchased ~6% of shares outstanding at start of year; dividend raised 25% in April 2024), reinvested ~$2.8B in land (nearly 60% YoY increase), community openings 106, reduced build times by 28%, ROE 16.6% .
Compensation Structure Analysis
- Mix shift to equity: CEO’s 2024 LTI target increased (all PSUs) and portion of annual incentive paid in time-vesting equity; ~93% of CEO total direct compensation is performance-based/at-risk .
- Rigorous annual plan: API target raised to $700m (40% above 2023 target) with asset efficiency hurdle; pure formula to 100% for API component; pool allocations via structured scorecard (CEO IPF 27.2%) .
- No option repricing; double-trigger CIC vesting; robust stock ownership and no hedging/pledging .
Related Party Transactions (Governance Considerations)
- Legacy 2000 program: Executives received minority interests in LLCs for e‑commerce investments; a 2024 sale generated distributions including $129,162 to Mezger (3.3% interest) and $439,161 of recognized taxable gains; program history disclosed and closed to new activity .
Risk Indicators & Red Flags
- 280G excise tax protection: CEO eligible for 280G tax restoration under CIC (not extended to most executives), which some investors view unfavorably .
- Legacy SERP/DBO: Closed plans but CEO retains accrued benefits (SERP PV $11.48M; DBO death benefit with tax restoration) .
- Offsetting positives: High ownership (2.9% of shares outstanding), strict anti-hedging/pledging, double-trigger vesting, strong pay-performance linkage and shareholder-responsive program changes .
Equity Ownership & Compensation (Multi‑Year View)
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary ($) | 1,150,000 | 1,150,000 | 1,150,000 |
| Stock Awards ($) | 7,105,882 | 7,178,664 | 8,699,979 (includes $1.5M RS in lieu of cash) |
| Non-Equity Incentive ($) | 7,480,000 | 7,280,000 | 6,295,702 |
| All Other Comp ($) | 78,909 | 80,391 | 81,291 |
| Total ($) | 15,814,791 | 15,689,055 | 16,709,331 |
Board Service & Committees (Context)
- Committees: CEO/Chair is not on standing committees; Audit chaired by Dr. Gilligan; Compensation chaired by Jodeen Kozlak; Nominating chaired by James Weaver; only independent directors on committees .
- Executive sessions: Non-employee directors meet without management each regular meeting .
Investment Implications
- Alignment: Significant personal ownership (2.9%) and heavy performance-weighted pay (PSUs) align CEO incentives with TSR, AEPS, and ROIC; anti-hedging/pledging strengthens alignment .
- Retention and supply overhang: Large unearned PSU stack (2022–2024 grants) and multi-year vesting of RS from annual incentive support retention but create periodic vesting/sale events; CEO exercised 333k options in FY2024, indicating some liquidity-taking that could create episodic selling pressure .
- Governance: Combined Chair/CEO role is mitigated by a strong Lead Independent Director and independent committees; however, 280G protection for CEO under CIC is a governance watch item; Say‑on‑Pay support at 81% suggests broad but not unanimous investor endorsement .
- Execution track record: Multi‑year improvement in revenues, EPS, ROE, and capital returns under Mezger, with strategic reinvestment in land/community count positioning KBH for continued scale and margin mix benefits from returning to a higher Built‑to‑Order mix .