Group tells investors to oppose 3 Ryland directors

By Ilaina Jonas

NEW YORK, April 10 (Reuters) - A group representing union pension funds urged investors of home builder Ryland Group Inc (RYL.N) on Thursday not to vote for three board members up for reelection, citing repeated failure to link executive compensation to performance.

CtW Investment Group, which works with unions that own about 100,000 shares of Ryland, urged investors to withhold their votes from Compensation Committee members William Jews, Norman Metcalfe and Charlotte St. Martin at the company's annual meeting on April 23.

"Even in an industry known for disproportionate compensation, Ryland's practices have long stood out," CtW Investment Group Executive Director William Patterson said in a statement.

Ryland Chairman and Chief Executive Officer R. Chad Dreier's annual bonus is set at 2 percent of pretax income, which may lead to an enormous payout even for sub-par performance, the group said.

In addition, 57.2 percent of Dreier's total compensation and 46.2 percent of other executive officers' total compensation, was performance-based in 2007, the group said.

"Executive pay should involve a higher portion of incentive, at-risk pay," the group said in a letter to shareholders.

A representative from Ryland declined to comment.

CtW's recommendation followed another from investor advisory group PROXY Governance Inc, which earlier this week urged voters to withhold their votes for the three members, as about 25 percent of investors did last year.

Ryland's CEO's average three-year compensation was 407 percent above the median paid to CEOs at peer companies.

"We have concerns regarding the company's executive compensation, particularly with regard to CEO Dreier, which is extremely high compared to peers given the company's financial performance relative to peers," PROXY Governance said in its recent report.

Drier's pay package was reduced in 2007 to $12.2 million from more than $28 million. (Editing by Andre Grenon)