Shareholders of Denver-based MDC Holdings Inc. authorized a vast increase in its shares of common stock at its annual meeting Monday but did not say when or if such shares would be issued.
The company, the ninth-largest homebuilder in the country, increased the number of authorized shares from 100 million to 250 million. While it didn’t specify a reason, the increase could be used in a 2-for-1 stock split, said Paris Reece III, the company’s chief financial officer.
“We’ve seen a number of our peer companies do that as their stock rose to certain levels,” Reece said. “Our stock reached $90 a share (last year), and at the time people were suggesting it might be a good time to do a 2-for-1 split.”
Since its $89.63 high in July, shares of MDC have dipped 35 percent to less than $59 as the housing market has cooled. The stock closed Monday at $58.51, down $1.07.
While the company last week reported solid gains in earnings for the first quarter, it posted lower orders.
The company also said speculative buyers are leaving the new-home market, resulting in an increase in cancellations and lower demand for new homes.
For the first quarter, MDC said it received orders, net of cancellations, for 3,800 homes, with a sales value of $1.36 billion, compared with net orders for 4,546 homes, valued at $1.48 billion, during the same period last year.
The company’s quarterly earnings rose to $95.4 million, or $2.08 a share, from $84.6 million, or $1.86 a share, a year earlier. Revenue rose 22 percent to $1.14 billion, from $933.9 million.
The company’s top two executives, chairman and chief executive Larry Mizel and president David Mandarich, each earned more than $40 million in salaries, bonuses and stock options.
The company, founded by Mizel in 1972, ranks No. 437 on the Fortune 500 list of top U.S. companies.
Since 1994, MDC’s market capitalization has gone from $95 million to $2.6 billion, Reece said.
In 1994, the return on equity was just over 10 percent, compared with 30 percent at year-end 2005.
“It is reflective of 10 years of extraordinary growth, the strength of our balance sheet and the quality of our earnings and returns,” Reece said.
The company’s recent filings also reveal:
MDC also paid Mizel’s wife, Carol, $120,000 for consulting services. Mizel Design and Decorating Co. helped with consumer marketing, merchandising, design work, human-resources development and product development, according to the proxy statement.
Mandarich’s son Christopher serves as regional president of Southern California and Nevada. Last year, he was paid a salary of $215,000 and a performance bonus of $438,250.
Mandarich’s sister Carol is a regional trade manager who was paid a salary of $80,000 and a bonus of $30,600 last year.
Staff writer Margaret Jackson can be reached at 303-820-1473 or mjackson@denverpost.com.
