UPDATE 2-Toll investors asked to vote no on CEO cash bonus

(Recasts first paragraph, adds Toll Brothers comment, ISS recommendation, byline)

By Ilaina Jonas

NEW YORK, March 3 (Reuters) - Two shareholder advisory companies on Monday urged Toll Brothers Inc (TOL.N: Quote, Profile, Research, Stock Buzz) investors to vote "no" to a cash bonus plan for its CEO, saying it would enhance his pay at a time when the company's stock is down because of the U.S. housing market downturn.

"It appears that the company has introduced this proposal as a way to ensure that (Robert) Toll receives a cash incentive even when company performance is suffering," Proxy Governance Inc said in a report.

The bonus plan is limited to Chairman and Chief Executive Robert Toll and capped at $25 million a year, the report said.

It seeks to ensure that bonuses to executive officers would be considered qualified performance-based compensation and would be fully deductible to the company for federal tax purposes, according to the report.

"We have just received the comments from Proxy Governance, and we are reviewing them," Toll Brothers said in a statement.

Robert Toll received no bonus in fiscal 2007. However, in fiscal 2006 he received $17 million and in fiscal 2005 he got a cash incentive of $27.3 million, Proxy Governance said.

Robert Toll's average three-year compensation is 265 percent above the median paid to CEOs at peer companies, Proxy Governance said.