Toll Brothers: For Whom the Bonus Tolls

Home builder Toll Brothers (TOL) announced yesterday that shareholders approved the re-election of CEO Bob Toll and a new bonus plan that according to a Toll SEC filing, “would work effectively in all economic climates.” Or as Jennifer O’Dell (deputy director of corporate affairs for the Laborers’ International Union of North America), whose pension funds own 200,000+ shares commented, “pays him simply for existing.”

Since Toll’s previous executive compensation plan was based on the company’s financial performance, Bob Toll did not receive a bonus in 2007. If the new plan had been in effect last year, Bob Toll would have received a $6.56 million bonus. The company has not yet released specifics on the new plan, other than the bonus is capped at $25 million.

Despite the opposition from the labor union and proxy advisor Institutional Shareholder Services, it would be nearly impossible to overrule the wishes of Toll’s officers and directors that comprise nearly 25% of the company’s shares.

Bob and his brother Bruce (Toll’s Vice Chairman and Chairman of Philadelphia Media Holdings, parent of The Philadelphia Inquirer and Philadelphia Daily News), founded Toll Brothers in 1967. The company went public on July 16, 1986 with the stock chart’s Sun appropriately in Cancer, the sign ruling homes. Toll’s stock price hit a record high in July 2005, the peak of the housing bubble and the end of Saturn’s transit in Cancer. Toll had a net of loss of $96 million in its first quarter ending January 31, 2008.

Despite the housing crisis, Toll Brothers has many fans on Wall Street who believe that because they build for the luxury market, their business is somewhat protected from the downturn. The stock has been trading for a while in the high teens to low twenties dollar range. TOL may break down that pattern by summer.

While I personally think that the quality of Toll homes is substandard at best, Bob Toll provides probably the most entertaining earnings conference calls in corporate America. With his Philly accent and candid style, you can tell he’s enjoying himself. Bob has become famous on the calls for his grading system of the housing market in various parts of the country, and is not afraid to call Florida “an F-.” (Maybe he should moonlight for the ratings agencies.)

With his Sun and Mercury in Capricorn harmonizing with Jupiter and Saturn conjoined in Taurus, it’s no wonder Barron’s called Bob Toll “the undisputed king of high-end housing,” and listed him among their top 30 CEOs of 2005. Capricorn is the sign of the executive and Jupiter (expansion) and Saturn (contraction), rule the business cycle. Capricorn and Taurus represent the earth element of physical form and structure. Taurus is ruled by Venus, the planet of beauty and luxury. Bob Toll’s Venus is in Sagittarius, which is ruled by Jupiter. Although Toll has built urban condo developments, the builder is most known for their “McMansions” – big faux Georgian-style homes on tiny lots in the suburbs.

Bob’s primary residence is not a Toll Brothers home. It is an 18th century farmhouse on 20 acres in Solebury Township Bucks County, Pennsylvania. Capricorn rules the past, and Toll describes himself as a history buff. In a USA Today profile, Toll says he “likes the big kitchen with a fireplace, the manicured gardens and the lake in back.” An apt description of an historical home (Capricorn) on lots of land (Jupiter) in a serene setting (Taurus).

Life is good for the Toll Brothers. Why they think its good PR to further enrich themselves while America is in a housing crisis, and at the expense of their shareholders, is truly baffling.

Bob Toll: December 30, 1940 time unknown Horsham, Pennsylvania. (Horsham, outside Philadelphia, is the HQ of Toll Bros. Bob was probably born in one of the hospitals in Phila. or the surrounding area.)

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