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Homebuilders
strong in weak times
Related
link:
The CEO Performance Directory
by
Paula C. Squires
Virginia Business
July 2003
Running
a company well in these tough economic times continues
to be a challenge. A hoped-for recovery from a quick
end to the war in Iraq has proved elusive, while shareholders
remain on the rampage over abuses of corporate power.
All
the news, though, isn’t bad. The real estate sector
remains strong as reflected in Virginia Business’
annual look at CEO performance. Buoyed by record low
interest rates over the last two years, home building
and mortgage loan companies are raking in revenues as
consumers snap up houses and other properties. Leading
our list for executive performance is Dwight C. Schar,
CEO of NVR Inc. of McLean, one of the country’s
largest homebuilding and mortgage-banking companies.
NVR builds about 12,000 homes a year in the metropolitan
markets of Washington, D.C, and Baltimore, Md.
Media-shy
Schar declines comment on his top placement, choosing
instead to let company numbers speak for him. Over the
past five years, the average growth rate of NVR’s
stock has been just over 70 percent based on a performance
measure called the compound annual return (CAR). Using
proxy statements, Virginia Business computes the CAR
by assessing a company’s stockholder return in
relation to a major and peer index over a period of
time — typically five years — that a CEO has
been in charge.
NVR’s
score of 71.6 is one indication of the company’s
solid performance, reaffirmed by first quarter earnings
that saw a 7 percent increase in revenues to $743.6
million. While the housing outlook remains positive,
some analysts warn that continuing job cuts could postpone
consumer home-buying decisions despite interest rates
that have dipped below 6 percent on some loans.
Besides NVR, other high-scorers include J.P. London
of CACI International in Arlington. An IT company, CACI
has benefited from the country’s boost in defense
spending.
At
the bottom of the list, with a CAR score of -39.2 is
Timothy M. Donahue, CEO of Nextel Communications. The
Reston-based mobile phone operator reported positive
first quarter earnings. But its stock dropped to $2.52
last year as telecoms continue to fight for market share
following the 2000 dot-com crash.
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