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Giving back…

Christmas may be over, but buried about halfway through upscale homebuilder Toll Brothers (TOL) recent K is an interesting little note about a change in CEO Robert Toll’s annual bonus. Under a bonus plan put in place in December 2000, the CEO would receive his bonus in shares of the company’s stock at the then-current price of $19.31 based on a formula that focused on pre-tax earnings and shareholder equity. In 2002, the bonus worked out to $9.6 million and in 2003, $20.3 million. In 2004, Toll (the man) would have received 1.07 million shares because Toll, the company, had a pretty good year. Those shares would have been worth $49.8 million. But instead, the board worked out an agreement with the executive and only paid him a mere $30.4 million worth of stock. Was this out of the goodness of his heart? Perhaps. But taking the full bonus would have had an impact on earnings as well by increasing the company’s SG&A expenses too.