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Options backdating scandals have felled many a tech CEO, and KB Home (NYSE:KBH) had the unlikely distinction of being an unlikely choice for an options backdating scandal. The company's CEO, Bruce Karatz, resigned today over stock options misdeeds. Jim Cramer (among others) didn't mourn him much, however, and said it's actually a good thing. Cramer says you have to go buy shares of KBH, because as the options scandal pressures a stock down, then it inches up, and then on the resolution of the scandal you must buy. With the CEO resigning, that is now out of the way.

Cramer said that even if you back-date options you have to think you are looking out favorably on the company down the road anyway. If a CEO was willing to take stock over cash then you should be inclined to take his lead. He thinks at 1.25 times book value that is a very cheap price. It has almost no debt. It could be a takeover target because it is so cheap. Cramer thinks private equity buyers could do it, or even a Lennar Corporation (NYSE:LEN).

KBH is widely and wrongly perceived as a California and Las Vegas homebuilder, but that isn't the whole truth, says Cramer. California is now 31% of sales and the company builds homes in 13 states. When California comes back, so will KBH. It also builds award-winning neighborhoods. He said he didn't like it when the shares were super-high, but now closer to lows he likes it.

CEO scandal? No worries, says Cramer: buy KB Homes originally appeared on BloggingStocks on Mon, 13 Nov 2006 19:40:00 EST. Please see our terms for use of feeds.

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