The $2 billion “family business”
When a public company with a market cap of over $2 billion does things that seem more appropriate for a small, privately owned company, investors need to start paying closer attention. In its recent proxy, Hovnanian Enterprises (HOV) the large home builder, disclosed that it was under contract to purchase millions of dollars worth of land from an entity owned by a “family relative” of Chairman Kevork Hovnanian and his son, CEO and President Ara Hovnanian. The current proxy doesn’t say who the relative is, but last year’s proxy notes that the company had an agreement to purchase $26.9 million worth of land from the Chairman’s brother and CEO’s uncle. The company entered into that deal back in 2001, though it didn’t disclose it until the proxy filed last January. In fiscal 2003, the company agreed to purchase $33.4 million worth of land in California, also from an entity “owned by a family relative” of the Chairman and CEO. Perhaps Hovnanian got a great deal on the land. Or maybe not. Either way, investors deserve more details.