"Perks have boomed since the 1980s, because they often didn't cost companies much and sometimes could be tax write-offs"
Related: Bailout Looters Didn't Pay Taxes
"Once normal, executive perks raising hackles" by Beth Healy, Globe Staff | March 8, 2009
Corporate America is losing its taste for flying in style: Citizens Bank has just put both of its jets up for sale. But in the post-bailout era, even small-time perks - like company cars and financial planning services - are probably on the way out for multimillionaire executives.
Whether it's home security or a security detail on personal travel for State Street Corp. chief executive Ronald Logue ($38,260), club memberships for Sovereign Bank executives (as much as $11,569), or retired Bank of America executive Chad Gifford's $1 million in annual private jet travel, perquisites that used to be the norm in corner offices are looking unseemly these days to corporate compensation committees....
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As bankers are being called before Congress - and admonished to show greater fiscal restraint amid multibillion dollar taxpayer bailouts - many companies are preparing for leaner compensation packages. Not only are senior executives more frequently traveling on commercial flights, but they are likely to see more modest pay and exit packages, or so-called golden parachutes, and the end of the generous freebies that boards of directors used to throw their way.
Executive perks show up in annual proxy statements - regulatory filings that divulge the pay and benefits of companies' highest-paid employees. Some of the items listed look like small change in the context of giant bonuses and stock options. But it's the nickel-and-diming of the shareholders that directors can't stomach this year, compensation consultants and recruiters say. Some of the examples cited here are from 2007, the latest available; disclosures for the financially ugly 2008 have just started to come out. A sampling:
At State Street, the Boston financial services giant, vice chairman Joseph C. Antonellis received tickets to sports events worth $1,450 in 2007 - part of his total compensation of nearly $9 million. Together, State Street's three top executives got company cars and security worth nearly $200,000 in 2007.Sovereign Bancorp's former chief executive, Joseph P. Campanelli, who received more than $4.4 million in total pay in 2007, had his $49,119 home security system paid for by shareholders.
Chad Gifford, who sold FleetBoston Financial to Bank of America and retired in 2005, received not only a multimillion dollar pay package and jet privileges but $626,000 in tax "gross-up" payments over the past two years to cover a change in taxes he has to pay on the jet benefit.
A State Street spokeswoman declined to say whether the same perks were likely to appear in the company's 2008 filing, due out soon. She said benefits like $3,000 executive health screenings were done "for efficiency's sake" and that financial advisory services and security were common....
It's a particularly touchy time for corporate spending that used to go virtually unnoticed....
Frank Glassner, chief executive of Veritas Executive Compensation Consultants in San Francisco, said when it comes to perks, directors are reacting to the anger among shareholders and others in the market over what's perceived as lavish compensation for poor performance. In the current environment, he said, handing club fees and big car allowances to executives will only anger investors and other stakeholders....
Perks have boomed since the 1980s, because they often didn't cost companies much and sometimes could be tax write-offs.... --more--"
