Are CEO's just not down with the mainstream American?
By VINNEE TONG, AP Business Writer Vinnee Tong, Ap Business Writer – Fri May 1, 12:07 am ET
NEW YORK – U.S. companies remain generous with the perks they give to CEOs, including some that are unfathomable to the average American worker: chauffeured cars, bodyguards, club memberships and free travel in company jets.
The median value of these and similar perks rose nearly 7 percent in 2008, according to an Associated Press analysis of regulatory filings from 309 companies in the Standard & Poor's 500. The increase came even as overall CEO compensation fell 7 percent to $7.6 million.
Perks rose despite a public backlash against such benefits, which many investors and lawmakers deem excessive. They argue well-paid executives should cover the costs of life insurance, charitable donations and financial planning themselves, especially as companies struggle with falling profits, slumping stock prices and massive job cuts.
Even some compensation consultants are saying enough is enough.
"Those are things the average person, the average Joe, doesn't have, so we're saying, don't give them perks," said Paul Dorf, a managing director at pay consultant Compensation Resources Inc.
But plenty of companies are keeping the spigots open. Occidental Petroleum CEO Ray Irani, for example, received $400,000 worth of financial planning, part of a $30 million pay package in 2008. To put it another way, that $400,000 in financial planning is more than the total annual household income of the vast majority of Americans. Occidental spokesman Richard Kline said the comprehensive financial planning helps Irani to "keep his complete attention on the company's business."
The median value of perks — which is the midpoint at which half of the executives received more and half less — was $170,501 in 2008, up from $159,586 the year before. Only three CEOs in the AP survey received no perks in 2008.
And perks made up a bigger percentage of total compensation, rising to 2.25 percent in 2008, up slightly from 1.95 percent, the AP's analysis found.
The biggest earner of perks in 2008 was Johnson & Johnson CEO William Weldon. His perks package was worth $3.9 million, about 16 percent of his $23 million in overall compensation. Included in his perks package was a $3.6 million payment to a retirement plan, about $154,000 in personal flights on the company jet and about $26,000 for a car and driver.
Only one CEO saw his entire compensation paid in perks in 2008: Richard Fairbank of Capital One Financial Corp. ($68,344). He received a car allowance, insurance, health care and home security.
Some companies went beyond that. Cablevision Systems Corp. offered top executives free cable TV, free high-speed Internet service and use of the company travel department to book personal travel. Defense company Halliburton Co., meanwhile, has two separate programs to match charitable donations and yet another that boosts political giving.
Fort Worth, Texas-based XTO Energy gave $3.4 million to Baylor University to help build a new sports complex. It was the second installment of a total $6.8 million pledge made in 2007 to supplement now retired CEO Bob Simpson's own $3.2 million donation to his alma mater.
XTO's generosity extended to an unnamed school that Simpson's children attend. It got a $775,000 donation in 2008, the fourth installment of a $3.1 million gift. A company spokesman did not return a call for comment.
On the other hand, some companies are increasingly using so-called perk allowances, basically cash that executives can dip into at their liking for the perks they want. For example, Tyco International CEO Edward Breen was given a $70,000 cash perk in 2008 while Reynolds American Inc. CEO Susan Ivey got $29,000 in cash to replace an old executive perks program.
While plenty of companies were still willing to dole out generous perks, compensation advisers say there has been a slight pullback in certain benefits that seem to incite the most public outrage. Ira Kay, director of compensation consulting for Watson Wyatt, called perks a major "irritant" to shareholders.
Some companies are changing their perks policies. Verizon Communications Inc. will no longer offer free jet travel to CEOs once they have retired, starting with its current chief executive. Past CEOs can still fly for free.
"Companies are looking for stuff that isn't central to their pay programs," said David Swinford, chief executive of the compensation consulting firm Pearl Meyer & Partners. "Optics are very critical right now."
- ?Lv 51 decade agoFavorite Answer
Yes does damn over charging CEOs. Promoted to the kings chair I reckon.
- Unsub29Lv 71 decade ago
I love the excuses - keeps him devoted to his job. I mean hello - he signed up for this job - he can afford to hire a financial planner. People poorer than him have done so!!! I have friends in that business. I was in that business myself. It's competely disingenuous. These CEOs make so much money that they can afford to do all of this themselves. People like us have to do this stuff ourselves. They think they are special and are worthy. They have "earned" it. It's not always true. Some of them come from that line - eased the obstacles - have the right connections. They are snobs.
The people should rise. Remember the French Revolution.