Posted on 05/24/2009 3:14:09 PM PDT by buccaneer81
A look at some of the most luxurious executive perks Economic downturn might make some of these doozies obsolete Sunday, May 24, 2009 3:42 AM By Alistair Barr
Running big public companies is hard work, so many executives get a little help to keep their noses to the grindstone.
Use of company jets, cars and drivers, free home security, free financial-planning advice and country-club memberships are some of the common rewards. Some of these perks keep coming after retirement. Even in death, the money keeps flowing in the form of so-called golden coffins.
In the midst of the worst global financial crisis since the Great Depression, public anger against executive compensation and benefits has reached fever pitch, so some perks might be on the way out.
Some of the most noteworthy perks from the golden era of executive compensation, according to corporate governance experts: The parting perk
Jack Welch ran General Electric for two decades, turning the industrial conglomerate into one of the most successful companies in the world and cementing a legacy as one of the best chief executives ever. He also negotiated an employment and retirement agreement in 1996 that included all the perks a hard-working executive could ever need, making him a noted leader in this area, too.
Welch retired on Sept. 30, 2001, and the next year he got roughly $2.5 million in perks under the agreement, according to the Securities and Exchange Commission, which charged GE in 2004 with failing to tell shareholders enough about the package.
The perks included access to GE aircraft for unlimited personal use and for business travel; exclusive use of a furnished New York City apartment that, GE said, had a rental value of roughly $50,000 a month and a resale value of more than $11 million in 2003; and a lengthy list of technology and security systems and services.
More perks were alleged in 2002 during Welch's divorce from his wife at the time, Jane Beasley Welch. Papers filed in the case disclosed floor-level seats at New York Knicks basketball games and courtside seats at the U.S. Open tennis tournament, among other things.
Realizing he faced "a huge perception problem," Welch quickly gave up most of the perks, according to a 2005 interview in The Boston Globe. But he didn't apologize, telling the newspaper the benefits were part of a contract that helped GE keep him at the company longer. Office renovations
Fast-forward to early this year, and another well-respected CEO faced a similar dilemma.
John Thain, the former CEO of NYSE Euronext, was hired by Merrill Lynch in late 2007 to steer the struggling brokerage firm through the financial crisis.
Soon after his appointment, Thain spent $1.2 million to renovate his new office, two conference rooms and a reception area. Furniture included a $35,113.50 "commode on legs" (which is not a toilet, as many thought); a $68,178 19th-century credenza and a pair of guest chairs costing $87,783.
The decorating spree emerged in January of this year, a few months after government bailouts of the largest U.S. banks and Wall Street firms, including Merrill.
Thain quickly said he would reimburse the company for all of the expenses, calling them "a mistake in the light of the world we live in today." 'Stay bonus,' even for the dead
Some companies are so keen to hold on to executives that they promise big pay and benefits even if the talent dies -- in contracts known as golden coffins.
Life insurance policies worth millions of dollars are the least controversial part of these packages, even though buying such coverage without company help shouldn't be too difficult for executives pulling in six or seven figures a year.
A peek under the lid of several golden coffins also reveals big severance payments, pensions and continued salaries if executives pass away.
Abercrombie & Fitch agreed to pay Chief Executive Mike Jeffries a $6 million "stay bonus" to keep him running the successful fashion clothing retailer, according to its 2007 proxy statement.
If Jeffries dies, the bonus stays and is paid out, along with $10 million from a company-purchased life insurance policy, to his estate. The retailer would also pay some of his incentive compensation, bringing the golden coffin's value to more than $17 million, had he died on Feb. 2, 2008, according to the proxy. Gross-ups
If General Dynamics Chief Executive Nicholas Chabraja died at the end of 2008, his estate would have received almost $30 million, according to the ship and airplane builder's latest proxy statement.
That includes a lump-sum cash payment of $8.56 million in lieu of his use of corporate aircraft and reimbursement for office space, administrative support and moving expenses. It also includes the cost of paying taxes on those benefits -- known as gross-ups. Tax preparation
Unfortunately for CEOs, the companies they run don't pay all their taxes. This can lead to a time-consuming process known as filing a personal tax return.
Big salaries, stock options, restricted stock awards and other forms of compensation can make tax returns tricky. So companies sometimes cover the cost of professional tax preparation and financial advice for their CEOs.
Occidental Petroleum provided Chief Executive Ray Irani with $403,285 in tax preparation and financial-planning services in 2008. That's nearly eight times the median U.S. household income, according to the AFL-CIO.
Irani received $49.9 million in direct compensation last year, making him one of the highest-paid executives in the U.S., according to The Wall Street Journal. Keeping the CEO safe
If companies are paying top dollar to attract and retain the best executives, some figure it's only right to protect the investment as much as possible.
Affiliated Computer Services spent more than $1.7 million from 2004 through 2007 for security systems, advice and equipment along with "personal protection services" for chairman and founder Darwin Deason, according to the company's 2007 proxy statement. Country club memberships
On the rare occasion it's safe to leave home, some CEOs like to unwind at country clubs. Companies say there's a business purpose for this perk: Hobnobbing with other executives can lead to new deals and ideas.
Countrywide Financial, now owned by Bank of America, paid more than $940,000 in country club memberships for CEO Angelo Mozilo and other executives including Stanford Kurland, David Sambol and Eric Sieracki from 2003 through 2006, according to proxy statements filed by the mortgage giant.
The money covered monthly dues, assessments, fees and business-related meals, Countrywide said, adding that "a significant portion" of the memberships were for "business purposes." Cars and gas
Mattel CEO Robert Eckert gets a company-issued credit card that he can use to gas up his car.
Ford Motor Co. and General Motors Corp. provide executives with two free cars a year and free gas as part of broader "vehicle evaluation" programs that require managers to give the companies feedback on how their vehicles perform. Execs, families fly in style
But why drive when you can fly?
In 2006, Ford paid $517,560 so executive Mark Fields could fly to work in Michigan from his Florida home and back on weekends on the company's aircraft. The automaker and Fields agreed to change the perk and now he commutes first class, at a cost of roughly $29,000 a year, according to the company's latest proxy. Ford still covers the tax on this perk.
Ford also paid for the family of CEO Alan Mulally to fly between Michigan and Seattle. They used to fly on company aircraft, but the automaker is selling its planes. Ford now will charter private aircraft for the CEO, and his family will be allowed to travel with him on trips. Ford also will pay for coach-class flights for Mulally's family when it travels at his request. Plum pensions
After decades of tireless service, CEOs deserve a comfortable retirement. If they haven't managed to save some of their prodigious earnings, some companies make sure the money keeps flowing.
By the end of 2005, Pfizer CEO Hank McKinnell had accrued a pension that the drugmaker estimated was worth more than $83 million, or more than $6.5 million a year, according to its proxy statement filed in 2006.
So what? I don’t care if these people get perks.
I agree 100%. But the left wants people to hate the wealthy.
But they’ll make an exception for Hollywood.
How about we start analyzing our media mouthpieces’ lifestyles?
Yes, the problem is when these companies fail; it’s our money that is paid to these executives if they are political donors; and not to bail the companies out..
These people are peons in the pecking order of wealth. So are the upper middle class peons who drive a Mercedes and have a couple of million and live in gated communities.
People had better notice that it isn’t the “I think I’m wealthy crowd” the media pillories, but the Super Super Wealthy Soros, Forbes, Gates and the rest of the 500 Billionaires around the world who are calling the shots on world governance.
This divide and conquer strategy is aimed at peons in every income strata except the Super Wealth who are doing the actual fomenting of class warfare when there are only truly two classes in the world: The Billionaires, and then, everyone else.
Sounds like a plan to me. Let’s start with MSNBC and take them out first.
I’m so sick of these rich liars defending their favorite political liars.
Obama’s losing support in central Ohio and they know it, although I must say I know people who are still waiting for their union manufacturing jobs to return under him so they can start building sleds, bicycles, dishwashers, etc.
Hopefully the same can be said about Kilroy and Coleman.
It’s time to get rid of the Political perks of the senate, Congress, Pres., etc. That’s where the people’s money is actually being wasted and paying for. I don’t care who gets what in the private industry. I don’t want to pay for Pelosi’s wasteful airplane expenditures. She can do fine on a lot less. Term limits would be a good start!
Coleman paid a big price for the stimulus money/police officer debacle. I’m waiting for someone to ask Mary Jo Kilroy just why Americorps volunteers must monitor the physical education teachers (and she needs to answer something other than ‘for the sake of the children’). I’d also like to know if the long-range plan is to move this government oversight into other subject areas, to make sure all teachers are educating properly.
Wow. I hadn't heard about that. She is a true Marxist.
Um...hmm perks eh? The most expensive perks probably in the world are those held by the main occupant of the White House. Let’s see not 1 but 2 specially modified 747s and other lesser aircraft at your disposal around the clock. A fleet of vehicles and the most sophisticated protection detail on the planet. A staff of who knows how many at your beck and call again around the clock. The vast resources of the US government also at your beck and call including billion dollar carriers also under your command. I am sure I am just scratching the surface of what the O has as perks.
When can we get an analysis of the perks top government officials get? Add up the cost of running AF1 or SS protection for a year and get back to me.
Alistair started his business journalism career at Kiplinger’s Personal Financial Magazine in 1995 after graduating from the University of Ripon & York St. John in York, England.
Alistair Barr is MarketWatch's West Coast financial-services correspondent, based in San Francisco.
Previously, he was a reporter for Bloomberg News in London.
Alistair Barr is a reporter for MarketWatch in San Francisco.
MarketWatch, Inc., a wholly-owned subsidiary of Dow Jones & Company
Agreed, but it seem several here support the Carl Marx version of capitalism.
That is not good. I just don’t understand how they would let Obama come in and fire their CEO.
They could run the same asvertisement for the folks in Tenn. where Saturn is built, but this time ask this question, "If small well made cars are what the preisdent thinks America wants - why is he trying to kill the Saturn brand at GM?"
Could be because they have never, ever, ever made a profit. And have had the same size creep as the rest of GM products.!!!
Amendment #6 - I first saw it mentioned here at FR.
As to size creap, the size of a Toyota Corolla is now the size of a Camry 10 years ago and a Camry is the size of a Taurus. This same size creap has happened with the Civic and the Accord. It was what people wanted and with the great four cylinder engines they are still economical in comparison to the US competitor.
I love my F150, but all you have to do is see that Ford killed the Taurus, for a couple of years, so they could rename all their cars with an F name. Imagine ending the Accord or Camry just to build an advertising campaign...not in Japan.
So, I guess I’m supposed to be enraged by this information? It really is none of my business how much the companies pay any of their employees because I am not a shareholder.
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