NovaStar loses $733 mln, pays fired CEO $1.34 mln

NEW YORK, April 9 (Reuters) - NovaStar Financial Inc (NOVS.PK: Quote, Profile, Research), a mortgage company that lost $733.1 million last year and whose survival is in doubt, on Wednesday said it awarded fired Chief Executive Scott Hartman $1.34 million of compensation in 2007.

Hartman was awarded a salary of $663,204, stock valued at $321,368, options valued at $321,368, and $31,573 of other compensation, according to the company's proxy filing with the U.S. Securities and Exchange Commission.

NovaStar also said it distributed $2.42 million to Hartman in January 2008, after terminating a deferred compensation plan the previous month.

Hartman forfeited the options because he was terminated "without cause" as part of a management restructuring, NovaStar said. The stock is also worth little because the Kansas City Missouri-based company's shares have lost most of their value.

Compensation is based on salary, bonus, the value of stock options and other awards granted during the year, and incentives and perks. The values of the restricted stock and stock options were taken as of the date they were granted.

NovaStar quit subprime mortgage lending last year, and its business now consists mainly of managing a mortgage portfolio. The company has said substantial liquidity risk threatens its ability to continue as a going concern and avoid bankruptcy.

The nation's housing crisis has caused well over 100 home loan providers to quit the industry.

Shares of NovaStar fell 8 cents to $1.77 in afternoon trading on the Pink Sheets. (Reporting by Jonathan Stempel;editing Gunna Dickson)