Corporate Executives Still Reeling in the Perks
America’s highest paid executives collectively made $30.9 million in additional compensation outside of salaries, bonuses and stock awards, according to the proxy statements of Fortune 100 companies.
While the perks don’t match the lavish extremes once reported at scandal-ridden Tyco International Ltd. or Adelphia Communications Corp., the statements show top executives enjoy pleasure trips on company jets, free home security systems, financial planning advice and personal taxes put on the company tab.
The Associated Press reported that companies spent a total of $6.4 million flying their CEOs around on corporate jets. Another $6.6 million was spent on personal tax bills; $575,989 went toward financial planning for top executives. Other perks included temporary housing, forgiven loans, relocation expenses, personal cars and higher-than-usual interest on deferred compensation.
Nell Minow, editor of The Corporate Library, a corporate governance advocacy group, said, "It's absurd to see these goodies handed out to people who are in the upper fraction of a fraction of the wealthiest people in the United States."
For example, Andrew R. Bonfield, CFO of Bristol-Myers Squibb Co. got $1.5 million to relocate. David W. Dorman, AT&T Corp.'s chairman and CEO, gets a monthly $12,000 housing allowance for his New York apartment overlooking Central Park. Robert L. Nardelli, Home Depot Inc. chairman and CEO, had a compensation package that included $2.3 million in forgiven loans and interest and $1.6 million in taxes.
Some observers defend the perks, which have been much-maligned in light of the corporate scandals of the last few years.
Alan Johnson, a New York compensation consultant, said that 16 Fortune 100 companies for security reasons require executives to fly company jets, no matter if the trip is personal or professional. "Within the Fortune 100, I don't think you're stretching the imagination that you're a target," he said.
And some perks are small, such as the $229 to service the home security system of ConocoPhillips’ president and CEO James J. Mulva. But even those perks bother some critics.
"To effectively nickel and dime the company for perks when you're making millions of dollars is unseemly," said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. "They're paid enough, they can afford to pay their own expenses."
The Intel Corp. takes a different tack. In its proxy the company said it "seeks to maintain an egalitarian culture in its facilities and operations." That means no reserved executive parking spaces, no separate dining room and no "personal-benefit perquisites to officers."
Said company spokeswoman Gail Dundas, "It's really to put the focus on ideas. Ideas are valued, not your title. It's a meritocracy."