UPDATE: Beazer's McCarthy To Receive $5.2 Million Exit Package

Builder Beazer Homes USA Inc. (BZH) will pay former Chief Executive Ian McCarthy an exit package valued at more than $5.2 million over three years.

McCarthy, who has been chief executive since the company's 1994 initial public offering, was terminated by the board without cause Friday and replaced with Allan Merrill, who had spent four years as chief financial officer. The exit of McCarthy, 57, came about three months after he agreed to repay $6.5 million and return company stock as a settlement with the Securities and Exchange Commission.

According to the SEC, McCarthy was unduly compensated during a period in which Beazer filed fraudulent financial statements. McCarthy, who admitted no wrongdoing, couldn't be reached.

According to a company filing late Tuesday, Beazer will give McCarthy three times his annual base salary of $1.2 million, or $3.6 million. He also will get an additional amount based on his average annual bonus for fiscal 2008 through 2010 that totals about $1.6 million.

He will also receive medical benefits for up to three years and up to $10,000 to pay legal fees associated with his termination, the filing said.

The amount McCarthy is receiving "is at the upper end of cash severance," says Paul Hodgson, a spokesman with GMI, a governance research organization. Hodgson says the current average is two times salary and bonus. "Most companies have been trying to bring that down."

Beazer's shares gained nearly 7% to close at $3.40 on the New York Stock Exchange Tuesday.

Housing-research firm Zelman & Associates upgraded Beazer shares to "hold" from "sell" Tuesday. "Merrill has done an admirable job at recapitalizing the company over the past several years, and will help to restore confidence in [Beazer's] controls and operations," the firm wrote in a client note.

-By Dawn Wotapka, Dow Jones Newswires; 212-416-2193; dawn.wotapka@dowjones.com

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