Shares of KB Home (KBH) are in focus after the homebuilder said it would cut its chief executive officer's bonus after a recording surfaced this week of Mezger berating his neighbor.

WHAT'S NEW: KB Home said in a regulatory filing that it will cut the annual bonus of President and CEO Jeffrey Mezger by 25% after he was caught on audio berating his neighbor, actress and comedian Kathy Griffin, and her boyfriend. On a more than two-minute recording published by HuffPost, Mezger used sexist and homophobic slurs after Griffin and her boyfriend called the police with a noise complaint about the CEO, who went on a tirade when police officers arrived at the scene. KB Home said its board decided to cut the bonus Mezger would have "otherwise been entitled to receive" because his "recent behavior in his personal dealings with a neighbor is unacceptable and a negative reflection on KB Home." The board also added that "If in the future there is any similar incident, he will be dismissed," but noted that Mezger has been a "very effective CEO."

WHAT'S NOTABLE: Mezger, who has been CEO of KB Home since 2006, received a salary of $1M in 2016 and nearly $8M in other compensation. He did not receive a cash bonus in 2016. The last time he received a bonus was 2014, according to filings.

UPCOMING EARNINGS: KB Home, which handily beat consensus estimates for its second quarter in June, is expected to report third quarter earnings on September 28. The homebuilder previously forecast Q3 housing revenue of $1.08-$1.15B and raised its fiscal 2017 housing revenue view to $4.2B-$4.4B from $4B-$4.3B. However, hurricane activity ramped up doing Q3, with Harvey and Irma impacting areas of Texas and Florida in the past weeks, which could potentially impact KB Home's results. Yesterday, Mizuho analyst Haendel St. Juste told clients that builders' margins could be hurt as labor and material costs rise following Harvey and Irma. In a note to clients this morning, MKM Partners analyst Megan McGrath said that hurricane activity is likely to dominate the earnings conversations, and will likely focus on short-term topline impacts as well as medium-term impacts like labor shortages and commodity inflation. McGrath noted that 35% of the homebuilder's communities are in the Florida, Houston and San Antonio markets. She is also looking to see if the company's order growth reaccelerated prior to the hurricanes.

OTHERS TO WATCH: Other publicly traded homebuilding companies include Lennar (LEN), Toll Brothers (TOL), Beazer Homes (BZH), D.R. Horton (DHI), Hovnanian (HOV) and PulteGroup (PHM).

PRICE ACTION: Shares of KB Home slid nearly 3% yesterday as the CEO's rant was widely recirculated on various media channels. In early trading this morning, the stock is up 0.5% to $20.81.