Executive Perks: Who Wins?
When it comes to executive compensation and perks, it’s interesting to note who really ends up getting what in the long run.
The Miami Herald recently compiled proxy statements for about 70 public companies and nearly 300 executives. While the usual outrageous perks were present—including a $25,000 “maintenance” tab at a CEO’s private residence—others directly reflected the current economic climate. Transportation company Ryder System, for example, decided to increase the amount it would foot for executives when it comes to services for tax preparation and financial planning. (A bit of future fiscal insurance? Perhaps.)
But whether or not such moves are a surefire sign of the current tough times remains to be seen. Not all corporations are choosing to deal with a bad economy by providing more financial-related services to executives. In fact, some companies are deciding to go the opposite way. At Office Depot, executives will no longer receive income tax services and financial counseling. Deferred-compensation got the axe too, along with matching contributions to 401(k)s from the company.
Still, other executives are managing to sit pretty as well in spite of the economy—and sometimes that perk even extends to execs’ relatives, too, the Herald reported. Ladenburg Thalmann Financial Services, which purchased the investment bank Punk, Ziegel & Co. in 2008, awarded $250,000 to Howard Chalfin (the brother-in-law of Ladenburg executive VP Mark Zeitchick) for introducing the companies to each other. (Finders’ fee, indeed.) Also on the familial front, the father of Universal Insurance Holdings COO Sean P. Downes, Dennis Downes, got a windfall when he received $410,000 in claims adjusting fees in 2008.
Even for those who only used to be executives, life still remains pretty swell on the perks front, according to proxy statements. The CEO of 21st Century Holding Company, Edward Lawson, resigned in June 2008, but will keep receiving $175,000 a year through 2010 on the condition he provides “advice regarding the company's business and growth strategy” to 21st Century.
But perk-wise, it’s not all flying high for executives in the current economy, either. According to a survey from NYSE Euronext, more than 25 percent of CEOs have seen cuts to their access to travel options such as corporate jets.
True, such cutbacks might be small potatoes compared with what many others have had to sacrifice in the current economy. But watching perk cuts trickle up instead of down is worth keeping an eye on, especially since it may be more of an indicator of whether or not the proverbial “green shoots” are truly on their way.