NVR Chairman Again Foregoes Salary, Bonus

Reston Home Builder Still Reporting a Profit

Dwight C. Schar, the executive chairman of NVR, is giving up his salary and bonus for the third year in a row as the Reston home builder weathers one of the worst housing slumps in decades.

The company said in a filing with the Securities and Exchange Commission yesterday that Schar would forego his $1.5 million salary and bonus in 2009 because of "the continued severe downturn in both the homebuilding industry and the overall economy."

While the company -- whose brands include Ryan Homes, NVHomes and Fox Ridge Homes -- has continued to turn a profit through the housing bust, the going has not been easy. NVR said in October that third-quarter profit fell 60 percent with new-home orders declining and fewer home loans being made. The company's shares were down 43 percent from their 52-week high of $679.37, closing yesterday at $385.83.

Nevertheless, NVR has steered clear of the major losses recorded by some of its peers. It has done so by avoiding big write-downs on the value of land because it typically takes options to buy acres rather than making outright purchases. As a result, it has not been stuck with land it cannot develop.

"They learned a very good, or very bitter, lesson during the last downturn," when the company entered bankruptcy proceedings because it could not meet the debt on its large land holdings, said Joseph Snider, a vice president and senior credit analyst with Moody's Investors Service. "They have very little invested in land -- which is the single largest capital investment for a homebuilder -- and as a result they are able to show positive cash flow."

Out of the 18 large homebuilders that Snider covers at Moody's, only NVR and MDC Holdings of Denver have maintained an investment-grade debt rating, he said.

While Schar will not take a salary, he has options to buy 200,000 shares at $189, half of which will vest this year and half of which will vest at the end of 2009, according to filings. Those options were worth about $39.4 million at yesterday's closing price.

Schar is not the only local executive trimming his salary. Craig A. Dubow, chairman and chief executive of McLean-based media giant Gannett, said last week that he would take a 17 percent salary cut. Student lender Sallie Mae of Reston also said last week that its chairman, Anthony P. Terracciano, would take a yearly pay cut and delay some of his stock awards.