Debt ceilings, bailouts, economic downturns, stocks plummeting and cost-cutting layoffs have become daily realities in today's economy. Faced with rising unemployment, pay cuts and the very real probability of losing their jobs, workers have tightened belts, cut all unnecessary spending and have pinched pennies.
Yet, the CEOs at some of the America's top corporations are rolling in the money and swimming in the perks. While top performing CEOs command top pay, it's the add-ons listed as "Other Compensation" that make most of working America cringe. (For a related reading, see The World's Billionaires 2011)
New government guidelines were implemented in the U.S. to create a more transparent view of CEO compensation. The SEC (Securities & Exchange Commission) corporate filings are so obscured in a chasm of word garbage, it can be mind-boggling just to find the page where the compensation is listed. While working America waits for a layoff notice, files for unemployment compensation or hopes the government will be mailing their Social Security check, corporate CEOs don't have much to worry about, even when their performance isn't stellar.
Here are the top five outrageous CEO spending abuses and perks:
Tax Preparation and Financial Planning Assistance
Despite earning millions in salary and bonuses, one of the most outrageous abuses of company money is being used for tax prep and financial planning.
Ray Irani of Occidental Petroleum whose annual salary is US$76.1 million receives US$556,470 for tax prep, and US$391,107 of financial planning services.
Richard Notebaert CEO of Qwest received US$62,000 for tax-consulting services. (For a related reading, see CEOs Who Went from Rags to Riches)
The CEO of Black & Decker, Nolan Archibald gets US$39,676 for his financial Planning, and AT&T CEO Randall Stephenson, gets US$14,000 to plan his financial future.
Basketball Tickets
Tickets to sporting events can be expensive, just ask Chesapeake Energy CEO, Aubrey McClendon. Last year, McClendon spent US$5.9 million dollars of his company's money to purchase tickets to the Oklahoma City Thunder's basketball games. McClendon coincidentally is part owner of the team.
Corporate Purchases
We all need to have garage sales for things we just don't use anymore, and corporate CEOs are no different, except they have built in buyers, the company's they work for.
Founder of Pilgrim's Pride, Lonnie Pilgrim dumped personal money into his company to save it from bankruptcy back in 2009. To repay him the company purchased his egg farm for US$12 million, in addition to the loan repayment, interest and an annual US$1.5 million consulting fee. (For a related reading, see People You Won't Believe Are Millionaires)
CEO Aubrey McClendon of Chesapeake Energy is not only a sports buff, he is a history buff too, selling his antique map collection to his company for US$12.1 million.
And CEO Martha Stewart earned US$2 million by selling exclusive rights to "film and produce" her TV show to her own company.
The Perfect Office
No longer content with the corner office or the penthouse in hues of teakwood, former Merrill Lynch CEO John Thain, whose tenure drove Merrill Lynch to lose US$15 billion in the fourth quarter of 2009, spent US$1,405 on a trash can. As his company was eliminating jobs, a newly acquired US$87,000 rug graced the floor of his office.
Most executives hire interior designers, and Thain was no exception hiring Michael Smith, of celebrity design fame. The tab for his designer office - US$1.2 million.
Relocation Expenses
Giving new meaning to relocation expenses, the CEO of Boston Scientific was recently given a relocation and cost of living allowance in the amount of US$1.3 million. This compensation was on top of his US$33.4 million salary. (For a related reading, see Entrepreneurs Who Built Their Fortunes From Nothing)
The best relocation expense and most outrageous CEO perk goes to James Bernhard CEO of the Shaw Group. Many companies pay their CEOs and corporate executives large amounts of money to "not compete or divulge company secrets" if they are hired by a competing firm. This is standard practice in many businesses, but Mr. Bernhard gets paid to keep his company's secrets even after he is dead. That's right, for two years after he relocates to the great hereafter, his heirs will receive US$15 million plus interest to "not compete" after death.
The Bottom Line
No one expects a top performing CEO not to have some perks, after all that's part of the magic of being a CEO. But when those perks are at the expense of the stockholders and employees, and the company is facing a financial crisis, perhaps boards of directors should rethink their executive compensation packages.
While these are the extreme CEO perks, many corporations have reduced or eliminated such extravagances, and many never offered them at all. (For a related reading, see The Six Highest Paid People On Wall Street)
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29 Comments
They are creating their own doom, like Gadaffi and others
ReplyWho bought our governments assets and where did the money go, can we have an inquiry, yeah right!
ReplyPerks? It's NOT perks/entitlements/benefits/fair rewards etc. It's stealing/theft/greed/, pure and simple. The world is changing and so are the people in it. One day in the not too distant future (I hope), a list of names and addresses of greedy fatcats (polies/CEO's/Bankers/Traders/lawyers and everybody else with an over-inflated idea of self-worth AKA parasites) who produce absolutely zilch to the benefit of humanity, will be invited to a lamp-post neck-tie party-RSVP's not neccessary.I dont see why the Arabs should be having all the fun, there's plenty of scum floating around on the top in the west as well.
ReplyI worked for a government funded Indigenous Resource agency and the abuse of funds was unbelievable. Seriously of tax payers seen where their money went there would be outrage. The CEO was the worst in ripping off the system, cars, fuel, money, holidays, paying friends top dollar for menial jobs all because they possessed a company credit card.
ReplyThe CEO of Games Workshop, Mark wells, has decided his 20% salary increase needs to be covered by his australian customers. on may 30th this year he disallowed european countries from selling gamesworkshop products to Australians because we were shopping online to get the fairer deal, the one were the australian dollar i properly converted according to international currency conversion rates. but GW thinks we should be punished and that they need bigger salaries for their CEO, so now we pay 3 or even 4 times the price of what the rest of the world pays, for the same product.
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