A Compliance Week Study of CEO perks offered at 250 large companies shows that the median spending on “all other compensation” rose 7.5 percent in the last two years. While average spending on perks for the group fell 6.1 percent, from $367,540 to $344,940, several companies skewed those stats as a number of now-defunct companies are not on Compliance Week’s list.
Perks ranging from use of corporate aircraft and cars, country-paid club memberships, home security systems, or supplemental retirement benefits are still common.
- 68.8 percent of companies offer personal use of corporate aircraft (still the most common CEO perk out there), compared to 76.4 percent in 2007;
- Supplemental executive retirement plans (SERPs) fell from 70.4 percent to 69.2 percent;
- Tax-preparation services fell from 68 percent to 57.2 percent; and
- Home security systems fell from 37.2 percent to 30.4 percent.
“Given the tendency to implicate perceived executive compensation excess in the financial crises, perks will be perceived even less favorably,” said Deborah Lifshey, managing director, Pearl Meyer & Partners. Other companies are not giving up any benefits at all. Lockheed Martin, Disney, and AT&T are a few that continue to give their executives all the usual perks.
Tax grossups, where companies cover the taxes that executives must pay on perks, have also received considerable scrutiny from investor activists. Richard Ferlauto, director of corporate governance and pension investment at the American Federation of State, County, and Municipal Employees union, told Compliance Week that AFSCME submitted shareholder proposals to eliminate grossups at five companies in the last year: CVS, Honeywell, Nabors, Northrop Grumman, and Textron. So far, Nabors, Northrop Grumman, and Textron have agreed to ban grossups.
Some executives are giving up such perks voluntarily. For example, Thomas Nides, chief administrative officer at Morgan Stanley, is forgoing any reimbursements for taxes related to income imputed to him for his travel between his home in Washington and the company’s New York headquarters. In its proxy, Morgan Stanley said that compensation for such trips totaled $73,950, in addition to a $58,595 gross-up for 2008.
| PERKS PROGRESS REPORT | 2007 | 2009 |
| Corporate Aircraft | 76.4% | 68.8% |
| SERPs | 70.4% | 69.2% |
| Tax Prep | 68% | 57.2% |
| Home Security Systems | 37.2% | 30.4% |