PHILADELPHIA – Stockholders controlling a quarter of Toll Brothers Inc. shares withheld their votes to re-elect the director who heads the executive compensation committee, a signal that investors want changes to the CEO's pay package, a union leader said Wednesday.

Analysts say that having at least 20 percent of shareholders withhold their votes sends a strong signal to directors that investors want changes to the CEO's pay package.

The Laborers' International Union of North America held protests at the luxury-home builder's annual stockholders meeting Wednesday as part of a campaign to get shareholders to withhold their votes from director Carl B. Marbach. The union, a labor-backed investment firm and others say company co-founder Robert Toll has received too much money considering the company's faltering profits and the pay of his peers.

About a dozen people picketed outside Toll's headquarters in Horsham, carrying placards that read, “Laborers union says: $29 million is too much” and “Robert Toll, how much is enough.”

Reporters were not allowed inside the shareholders meeting. Jennifer O'Dell, the union's assistant director of corporate affairs, said she was given the preliminary vote tally by the corporate secretary during a question-and-answer session at the meeting.

“We are absolutely pleased,” O'Dell said. “Hopefully, the next step is to start a real dialogue with the company about executive compensation.”

A Toll Brothers spokeswoman said the company respectfully disagreed on the subject of Toll's compensation.

Two proxy advisory firms, Institutional Shareholder Services and Proxy Governance Inc., recommended withholding votes from Marbach because they said Toll was paid well above his peers.

The average three-year compensation paid to Toll was 564 percent higher than the median to CEOs at peer companies, according to Proxy Governance's report.

The action by Toll Brothers shareholders was significant, analysts said.

“When individual directors are singled out with higher withhold votes, it would send a signal,” said Shirley Westcott, managing director of policy at Proxy Governance in Vienna, Va.

LongView Funds, a unit of union-controlled Amalgamated Bank, also backed withholding votes from Marbach.

The union noted that Toll got a bonus of $17.5 million in 2006 as the company's profits fell by 15 percent. Over the last 10 years, the union said Toll has taken in bonuses totaling $120 million.

The union also took issue with 250,000 stock options Toll received last year, saying he already owns about a fifth of the company's outstanding stock.

Toll's bonuses are tied to company performance.

In the last three fiscal years, the company has cut down on the bonuses, ISS noted. But ISS also said that the bar for bonuses was set too low, letting Toll get an “annual guaranteed bonus payout despite mediocre or lackluster company performance.”

Moreover, the bonus adjustments remain “inadequate” because they don't take into account the CEO's total pay package, including stock options, deferred compensation and retirement benefits, said the Rockville, Md.-based group.

Shares of Toll Brothers rose by 1.06 cents to $28.40 in afternoon trading on the New York Stock Exchange.

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