|Copyright:||Copyright 2011 USA TODAY|
For many CEOs, it’s not just the pay, it’s the perks.
Paying big bucks for personal use of the corporate jet, country club memberships, financial planning, legal advice, cars, meals, health club memberships, personal trainers and other goodies might appear unseemly following a recession, massive corporate layoffs and cost-cutting measures affecting most average workers’ wages and benefits. But those goodies are among a wide array of perquisites bestowed upon scores of CEOs and senior managers, according to a
“We all kind of scratch our heads when executives are making millions, and (corporate) directors feel obligated to give them
The still shaky economy and shareholder unrest have begun to temper the value and scope of executive perks. Last year, some companies eliminated specific entitlements, such as tax gross-ups — essentially, payments to cover taxes on the perks’ value. A handful of companies began capping the amount of personal use of the corporate jet, while others started swapping specific perks for extra cash.
But even as post-recession executive pay rebounded sharply last year, and
A look at what some companies provided:
•Black & Decker CEO
•Martha Stewart Living Omnimedia paid Stewart
•Reynolds American paid CEO
“Some of this is hard to believe,” says
Many companies say otherwise — providing perks even to those no longer on the payroll.
“You look at some of this stuff, and you shake your head,” says
Still, companies appear to have ample rationale for keeping insiders happy. Among the reasons perks are handed out:
•Staying safe. Personal use of the corporate jet has skyrocketed in the decade-long wake of post-9/11 security concerns. Scores of companies, ranging from Coca-Cola to
Columbia reported undisclosed security costs for Chairwoman
Some companies are beginning to curb the corporate jet.
But since the
•Reducing distractions. Many companies rationalize estate planning, legal assistance and other service payments to executives by saying they allow them to concentrate on work.
U.S. Steel says designated parking spaces help keep CEO
Other firms hand out perks simply because they’re handed out at other firms.
•Ensuring good health.
ITT provides up to
Johnson says for the sake of appearance, it’s best to get rid of most perks and just roll the costs into salaries and bonuses. He limits his perk recommendations to physicals and health club memberships. “If it makes the guy healthier, there’s a return on the investment,” Johnson says.
A handful of companies provide no perks. Benefits provider
A 2010 survey of 251 companies by compensation consultant
Water heater manufacturer
DPL grandfathered the cash allowance because it “was an expected element of their compensation,” DPL says in its proxy.
Compensation consultants say such sentiment makes it doubtful most perks will fade away.
“Forget about the corporate boards put in the position where they impose takeaways,” Goldstein says. “Why aren’t there more cases of management saying, ‘The right thing to do is to give these up’? Given what’s happened in terms of corporate layoffs and salary cuts, why aren’t we seeing CEOs giving perks up voluntarily?”