The boss of Miami homebuilder Lennar Corp., Stuart Miller, recently pulled in a $21.5 million bonus in 2005. By the numbers, running a big home-building company has been a ticket to riches for Lennar Corp. Chief Executive and President Stuart Miller.

The amount of Miller's bonus is calculated on a percentage of Lennar's pre-tax profit. This means that the more money Lennar generates, the more Miller generates.

On the other hand, some compensation experts question Lennar's method for rewarding Miller, given its growth in recent years. However, Bruce Gross, Lennar's chief financial officer, said that the bonus has a lot to do with the uniqueness of home building among big businesses.

Gross said that the home-building industry is an entrepreneurial industry, and it takes a unique set of skills to run a home-building company. Miller's bonus is assesses by a few different factors: earnings, customer satisfaction and return on capital. This is a measure of how a company uses money invested in its operations.

The bonus of Miller usually ranges anywhere from 0.5 percent to 1 percent of Lennar's pre-tax profit, depending on Lennar's performance. Since Lennar topped its targets, Miller earned the full 1 percent of Lennar's nearly $2.18 billion in pre-tax earnings.

Lennar has used this bonus formula for the past five years. Lennar, though, was a much smaller company in 2001. Gross said that Lennar's size is immaterial to the bonuses.

By M. Sese
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