Hovnanian combines titles, raises watchdog hackles

By Helen Chernikoff

NEW YORK, Nov 6 (Reuters) - Governance watchdogs have Hovnanian Enterprises Inc (HOV.N) in their sights again, after the homebuilder announced this week that it was adding chairman to its chief executive's collection of titles.

At last year's annual meeting, activist investors criticized the builder for paying Ara Hovnanian, then chief executive and president and now chairman, too, more than his peers.

This year's meeting may well feature a similar shareholder resolution scolding the company for combining the titles, said Patrick McGurn of investor advisory firm RiskMetrics.

The board of the Red Bank, New Jersey-based company voted unanimously to make Ara Hovnanian chairman after the recent death of his father, Kevork Hovnanian, who founded it in 1959.

"It wouldn't shock me if this ended up on their proxy this season," McGurn said.

Hovnanian declined to comment.

A separate CEO and chairman creates a system of checks and balances for shareholders, protecting them from abuses such as excessive compensation, said Chris Cernich, a director with Proxy Governance, which provides proxy voting recommendations.

"It looks like Hovnanian shareholders need more of an advocate," Cernich said.