- SEC filing by MDC.
- MDC to pay lump sum to Mizel, Mandarich.
- Total payment of almost $31 million coming next year.
Larry Mizel and David Mandarich will each receive big checks from the Denver-based homebuilding company they run.
On Oct. 20, 2014, MDC Holdings Inc., parent of Richmond American Homes, will pay a lump sum of $14.8 million and $15.9 million, respectively, to Mizel and Mandarich.The payments are in “full satisfaction of their past, present and future retirement benefits,” according to a Securities and Exchange Commission filing last Friday.
On Friday, MDC had reached an agreement with Mizel, MDC’s EO, and Mandarich, the company’s chief operating officer, for the early termination of their retirement benefits, according to the SEC document.
Concerns about their retirement benefits had been expressed by “significant institutional investors,” according to the SEC document.
The deal reached with Mizel and Mandarich is in accordance with recommendations from Pearl Meyer & Partners, LLC, the independent compensation consultant “to the MDC’s compensation committee.
The payments to Mizel and Mandarich will equal the amounts accrued on the books through June 30, with respect to MDC’s estimated liability to pay their retirement benefits.
“As a result of the termination of the Retirement Benefits, the Company will no longer incur ongoing Retirement Benefit accruals,” according to the SEC document.
The deductibility for tax purposes under IRS rules of the payments will be determined by the end of the taxable year in which the payments will be made.
“However, because the Company believes that it is more likely than not that the payments will not be deductible, as part of its 2013 fourth quarter income tax expense determination, the Company will record a reserve of approximately $11.9 million against its deferred tax asset,” whether or not MDC’s board believes that the payments are deductible.
Whether or not the payments are deductible, the board “believes that the early termination of the Retirement Benefits is in the best interests of the Company and its shareholders,” according to the SEC document.
MDC, with a market cap of $1.45 billion, is one of the nation’s largest home builders.
Richmond American Homes of Colorado is by far the most active builder in the Denver area.
In the first eight months of the year, it pulled permits for 944 homes in the Denver area, almost three times the 321 permits pulled by Lennar Homes, its biggest competitor in Denver area, according to the Home Builders Association of Metro Denver.
Interested in buying a Richmond Home? Please visit COhomefinder.com.
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