A costly foreclosure…

images2.jpgStruggling Georgia-based mortgage lender HomeBanc (HMB) finally evicted long-time CEO Pat Flood last week, replacing him with COO Kevin Race.  HomeBanc, which has suffered from falling originations and liquidity issues arising from its REIT status, has seen its stock tank in recent months, falling over 50% from its July 2004 IPO price of $7.50.  The none-too-happy shareholders were probably further incensed when HomeBanc filed this 8-K on Friday with the details of Flood’s severance package. 

According the filing, Flood will receive, among other things, a cash severance payment of $3.4 million, the acceleration of unvested equity awards worth $975,000, accrued salary and vacation of $166,000, and $50,000 in lieu of outplacement services – a total of $4.5 million for essentially chewing up half of HomeBanc’s total capital in just two and a half years.

In an ironic twist, the day after the announcement of Flood’s departure, Fortune magazine named HomeBanc one of its top 100 places to work for, noting that "[w]hen faith-based lender HomeBanc had to lay off 60 people, annual bonuses to top execs were the first thing to go.  Departing employees were given extra paid vacation, severance, and outplacement help. "  I guess no one realized that generosity extended all the way to the top.