Robert Toll: ‘Everywhere You Don’t See High-Rises, There Are Places to Build’
McMansion master Robert Toll, founder of Toll Brothers, the country’s biggest luxury home builder, has ventured into New York with condos in three boroughs. The 67-year-old was reelected last week as Toll’s CEO, even though profits tanked last year during the housing crisis.
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The Sit-Down
Location: We’re probably in a recession, and a big culprit is the housing market—prices were much too high, and now they’re really sinking. As the nation’s largest luxury home builder, do you feel guilty?
Mr. Toll: I feel guilty for not being more cautious and recognizing that we had to be on thin ice because things had been so good for so long. [But], by 2000, we should have entered the next down cycle, on an ordinary basis. But we didn’t. And if I had become cautious then, my company would have missed the great ride that it took in ’05 and ’06. In ’05 we made $800 million plus—net, net, net!
Yet, in 2005, you said in an interview that the housing market was ‘frothy and infested with speculators,’ and you also said ‘the mortgage industry needed to tighten up its lending practices.’ But you profited brilliantly through exactly those problems.
Now, we didn’t profit from those things. … We profited from tremendous demand for housing. That demand was pushed above what should have been by speculation, by investment, and by a mortgage market that was rabid for product.
If you knew the system was flawed, what could you have done?
You see, on the one side I had sales people who are on commission, who are paid to sell; and on the other side I’m asking these sales people not to sell to speculators, investors or people who are demanding more mortgage than they should, and are therefore at risk. … The reason capitalism works is that one of the basic instincts of human nature is greed; everybody wants to get bigger, better, more, you know? And there are very few of us that walk around all day long with the thought of being our brother’s keeper.
But as the biggest luxury developer, do you feel a social responsibility for not selling houses to people who shouldn’t be buying them because their finances aren’t good enough?
No, I don’t think we’re feeling socially responsible not to sell homes. I think it’s on a business basis that we don’t want to sell homes to people that are going to fail, because we don’t want those homes back.
As of today, you have a new bonus agreement, which gives you a bonus even if your company isn’t performing well.
The board felt for somebody who works as hard as I do—I guess, they think, as well as I do—that they ought to have the option to give me some additional bonus when the formula has taken me down to zero.
Do you deserve a multimillion-dollar bonus when your company is doing poorly?
I definitely deserve to make four, five [million], etc., in that range, for the work that I do.
You made $19.2 million in 2006, plus a $17.5 million bonus, but made over $8 million in total compensation last year, with no bonus.
I don’t think your numbers are right.
They’re from your company’s regulatory filings.
O.K. Go ahead.
How much time have you spent skiing this winter?
Ski season is still on, and I go out to Telluride and ski at the end of the week, and the rest of the time I go to the office and work. My honey, Jane, and my dog moved to Telluride; we have a home in Telluride. … I go back and forth as much as I can, and try and be with my honey and my mountain.
What kinds of issues keep you up at night? It’s been such a weird winter.
It hasn’t been weird for us in Telluride; it’s been the greatest winter on record.
You know what I mean—in America over 3.6 million mortgages were foreclosing or past due in the last three months of last year. Do you worry about families losing their homes, or just homes that are Toll’s?
I try when I’m not working not to worry. What do I worry about? I worry about my family’s health first.
But haven’t foreclosures been a plague on housing?
Is it a plague? I think that’s too strong a word. … Remember, it’s a two-way street. The people were to some extent misled into buying more than they could afford, and borrowing more than they could afford. But it’s a two-way street, the person has to be willing to be led, you have to want to go for the sales pitch, take a home that’s bigger than you want to, take a mortgage that’s bigger than you want to. Next Page >
505 Greenwich Street
"Rarely available, this oversized two bedroom, two and a half bathroom home... " More details |
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Disgusting. Purely disgusting. "I deserve to make 4,5...million." This guy's disoriented values give capitalism and free markets (which are good things) a bad name. Sickening. Perhaps the final death blow to any authenticity NY has left.
What the hell is wrong with a guy who presided over $800 million annual profits making several million in an off year?
New York is only authentic when it's obsessed with money. This is the business capital of America, after all. Astors, Morgans, Rockefellers and Vanderbilts turned New York into what it is.. not a bunch of disfunctional perverts in the 1970's.
There is no problem with making a few million a year. The problem is when someone thinks they deserve that. Working hard and getting compensated is fair, but the language of "deserving" millions is what's troubling. Cancer reseachers "deserve" - Bruce Toll does not and should be thankful for being compensated as he is. Second, while NY is and was the business capital, the difference is in the past the city was diverse enough to host many types of people who gave made it the dynamic city it is. NYC is going to be no different than Palm Beach in 20 year - an island of money, decadance, and disappointment. Thank God for Philadelphia.
In a sense, the interviewer really missed the boat on this last question - anybody building in Manhattan and Brooklyn in inherently building green - the average New Yorker produces a carbon footprint less than 1/3 that of the average American - and I suspect even much lower in Union Square and Williamsburg, where toll is builidng, as those neighborhoods have car ownership well below 10%. Simply having everybody living at the densities in these neighborhoods with the amazing transit available would cure our entire greenhouse gas problem overnight, even if not built close to LEEd standaqrds. Nonetheless, it's a shame that the leader of Toll Brother is such such a smug douche.
Mr. Toll is the conductor of NY's express train to clown town.
Japanese executives make a fraction of what executives make in this country.
This guy is probably worth $100 million, and look at the ugly runner carpeting. I assume it's carpeting. Tile couldn't be that ugly. It looks like somehing you'd buy at Wal-Mart. Snazzy! Not!
How many guys sit around with a football in their crotch, and a golf club in their hands?
Moron,
It's not a golf club, it's an air pump (for the Football).
A couple of comments on the previous comments. It's Bob Toll, not Bruce Toll the article is interviewing. Bob is also worth a lot more then 100 million. The tile your seeing is imported and hand laid and extremely expensive.
Why shouldn't he be compensated as much as he is. He started the company from scratch, building additions, now he has built one of the largest home building companies in the country. Give this man credit. Bob is one of the most brilliant and intelligent person I have ever known. He is compensated for his knowledge and drive and I think he is doing one hell of a job considering the market. It's funny that when his company made over 800 million, net, net, that people were still down at the corp. office when it was in Huntingdon Valley, protesting. He employees a lot of people and has made a lot of people a lot of money. Don't go for his throat when times are tough. He odviously knows what he's doing, according to the board.
I would never buy from this company again. I purchased one of Robert Tolls property's and it is infested with toxic mold and Robert Toll does not care, he can not claim he does not know. He was informed about the toxic mold enviroment that his company built and sold to us, and he has refused to properly repair the product that he sold us. We have never spent on night in this property. It has been almost two years.
If his company he claims is not doing well then if he loves it why would he drain it. Litlle mom and pops stores can not collect a bonus or even sometimes a paycheck, so why would he take a bonus if the company is not doing well.