CEO Perks Rise As Pay Falls

NEW YORK (AP) -- U.S. companies remain generous with the perks they give to CEOs, including some that are unfathomable to the average American worker: chauffeured cars, bodyguards, club memberships and free travel in company jets.

The median value of these and similar perks rose nearly 7 percent in 2008, according to an Associated Press analysis of regulatory filings from 309 companies in the Standard & Poor's 500. The increase came even as overall CEO compensation fell 7 percent to $7.6 million.

Perks rose despite a public backlash against such benefits, which many investors and lawmakers deem excessive. They argue well-paid executives should cover the costs of life insurance, charitable donations and financial planning themselves, especially as companies struggle with falling profits, slumping stock prices and massive job cuts.

Even some compensation consultants are saying enough is enough.

"Those are things the average person, the average Joe, doesn't have, so we're saying, don't give them perks," said Paul Dorf, a managing director at pay consultant Compensation Resources Inc.

But plenty of companies are keeping the spigots open. Occidental Petroleum CEO Ray Irani, for example, received $400,000 worth of financial planning, part of a $30 million pay package in 2008. To put it another way, that $400,000 in financial planning is more than the total annual household income of the vast majority of Americans. Occidental spokesman Richard Kline said the comprehensive financial planning helps Irani to "keep his complete attention on the company's business."

The median value of perks -- which is the midpoint at which half of the executives received more and half less -- was $170,501 in 2008, up from $159,586 the year before. Only three CEOs in the AP survey received no perks in 2008.

And perks made up a bigger percentage of total compensation, rising to 2.25 percent in 2008, up slightly from 1.95 percent, the AP's analysis found.

The biggest earner of perks in 2008 was Johnson & Johnson CEO William Weldon. His perks package was worth $3.9 million, about 16 percent of his $23 million in overall compensation. Included in his perks package was a $3.6 million payment to a retirement plan, about $154,000 in personal flights on the company jet and about $26,000 for a car and driver.

Only one CEO saw his entire compensation paid in perks in 2008: Richard Fairbank of Capital One Financial Corp. ($68,344). He received a car allowance, insurance, health care and home security.

Some companies went beyond that. Cablevision Systems Corp. offered top executives free cable TV, free high-speed Internet service and use of the company travel department to book personal travel. Defense company Halliburton Co., meanwhile, has two separate programs to match charitable donations and yet another that boosts political giving.

Fort Worth, Texas-based XTO Energy gave $3.4 million to Baylor University to help build a new sports complex. It was the second installment of a total $6.8 million pledge made in 2007 to supplement now retired CEO Bob Simpson's own $3.2 million donation to his alma mater.

XTO's generosity extended to an unnamed school that Simpson's children attend. It got a $775,000 donation in 2008, the fourth installment of a $3.1 million gift. A company spokesman did not return a call for comment.

On the other hand, some companies are increasingly using so-called perk allowances, basically cash that executives can dip into at their liking for the perks they want. For example, Tyco International CEO Edward Breen was given a $70,000 cash perk in 2008 while Reynolds American Inc. CEO Susan Ivey got $29,000 in cash to replace an old executive perks program.

While plenty of companies were still willing to dole out generous perks, compensation advisers say there has been a slight pullback in certain benefits that seem to incite the most public outrage. Ira Kay, director of compensation consulting for Watson Wyatt, called perks a major "irritant" to shareholders.

Some companies are changing their perks policies. Verizon Communications Inc. will no longer offer free jet travel to CEOs once they have retired, starting with its current chief executive. Past CEOs can still fly for free.

"Companies are looking for stuff that isn't central to their pay programs," said David Swinford, chief executive of the compensation consulting firm Pearl Meyer & Partners. "Optics are very critical right now."

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They're Not Listening 5/1/2009 11:45:00 AM Most of these perks are things that should be coming out of their exorbitant salaries. Bodyguards and perhaps transportation I could see as legitimate and perhaps necessary to the position. If so, they should as part of a package. Other things should be cut and put back onto the holder of the position. Especially charitable contributions - such things should go through a standard matching gifts program at the company if one exists. And it should be just that: "Matching". These people are not royalty. It is time they rejoined the realities of the working world.
CEO Compensation 5/1/2009 12:01:00 PM This is, and always has been a sore spot for me. CEO compensation in this country is totally out of control. The last statistics I had put CEO compensation in Japan at 25 times the average hourly worker's pay. In the U.S. it is over 400 times hourly worker's pay. These numbers are several years old and judging by the dramatic increase in pure greed over the last few years, I am sure the real numbers are much higher now. Lets face it folks, no man is worth 30M a year plus perks. The board of directors of these companies that approve such rediculous compensation packages for these adult spoiled brats should should be lashed in public!
They just don't get it! 5/1/2009 12:02:00 PM These people are just people. They are not gods and they should not be treated as such. They should be viewed as a working individuals...who make a lot of money. And because they make A LOT OF MONEY, they should be paying for these things themselves - just like I have to do.
Money Spent 5/1/2009 12:08:00 PM I don't think we as a public have any right to say how much a privately held company can or cannot pay their employee's. As long as we as a public aren't paying for it. Too much involvement is going on here-we are opening the doors to real problems here-is the next step going to be that the public gets to tell me as an individual how and what to spend my money on? Wake up people! We are setting ourselves up here!!!!!
Exorbitant salaries 5/1/2009 12:27:00 PM My opinion is that the CEO's of the large corporations don't have a clue where their money is made. Occidental Petroleum CEO Ray Irani's, $30 million pay package is more than probably 750 working man's annual salaries including perks. I have started voting against any existing board member of corporations on my proxy ballots just to get some new blood out there.
CEO Pigs at the Trough 5/1/2009 12:31:00 PM So these CEOs can't afford to pay their financial advisors? The spouse could write the check while they "maintain their focus". And how about those retiree perks? Guess most here will have to rethink their venom spouted toward blue-coller workers/retirees struggling just to maintain basic wage/benefits. Class warfare is all relative and very real.
re: Money Spent 5/1/2009 12:34:00 PM You just don't get it. These aren't privately held companies. They are publicly traded. That means that I can (and probably do through 401k programs) own a piece of them. I don't think anyone who works for a company I own should be that kind of compensation (money and perks). And another thing. What makes yu think we aren't paying for it? Do you think that money just materializes out of thin air? They raise their prices to be able to afford those ridiculous compensation packages. That means you ARE paying for it, everytime you buy something.
Before we go... 5/1/2009 12:36:00 PM Before we go beating on CEOs, could we all take a look at the compensation packages for "professional" hockey/basketball/etc players? I agree that no person is worth 30M - particularly if they have no post-secondary education and aren't directly responsible for running something that employs thousands. Our "civilized world" is definitely WAY out of control.
Greed at publically owned companies 5/1/2009 12:42:00 PM These types of perks are widespread at public corporations (Occidental & Tyco for instance, are public.) And for those privately-owned companies, who picks up the tab for their thousands of uninsured employees? Taxpayers.
To keep his attention on the company's business 5/1/2009 12:48:00 PM If my company would supply me with a car with all gas paid and a maid I could keep my attention on my job better. Think I have a shot?
RE: Money Spent 5/1/2009 12:53:00 PM True, the PUBLIC doesn't have a say, but since my retirement depends somewhat on the profit of these companies, it is time I stood up and protested their being looted at the top. The CEO ultimately doesn't really care about the long term profitability because after one year of these benefits and perks, he is set for life.
What about the shareholders 5/1/2009 1:08:00 PM Wouldn't the company have more money to spend on the company, if the guy at the top didn't take so much for themselves? Would the shareholders benefit more if tne CEO didn't take so much of the profit? I think shareholders deserve a say in how much money the CEO should be getting. As a shareholder, I think I have a right to how much of the company's money is being doled out to one individual. A company is a team of people, not a CEO.
re: money spend 5/1/2009 1:09:00 PM oh nice not a single comment yet that it's the fault of the unions - may this one is really not connected to that devlish group of people. However dear poster there is an issue for the public to get involved when CEOs earn >400 times of the workers, that even can't afford with the thin wages decent healthcare, there is a problem when the country has >7o million people without healthinsurance, no rights at their workplace ... when the whole US corporate system is getting corupted by the CEOs and board rooms, that even shareholders have no control over the compensotion policies of their 'senior management' ... unless you sit pretty on such a chair on the top floor or the corporate jet ... then of course you don't have to consider public issues like that ...
CEO Perks/Salary 5/1/2009 1:19:00 PM As stated in the response "CEO Compensation", CEO's of companies based overseas make a fraction of what the CEO's in the US make. I currently deal with a European company with gross sales of $1.5 Billion. What do you suppose this man's total compensation is? WITH stock options and salary combined - he is making just a hair shy of $1.35 million. Maybe we need to off shore the ivory towers.
Offshore the CEO's? 5/1/2009 1:44:00 PM That is the best comment I have seen today. Seems like most of these companies overseas are doing considerably better than most US run corporations are. I am sure there are execs overseas that can run these companies infinitely better than these greedy CEO's in the US and at a fraction of the cost. Heck, they already perform their jobs offsite anyway, why not from a low cost country.
I would take it 5/1/2009 2:01:00 PM I agree with most posters that this issue stems some hostility in me too, but the truth is I would gladly take a big bonus/ salary just like the CEOs who are getting it now. The reality is whether or not we think it fair, there is a set perameter of work that is required of the CEO and a pay structure that follows. There are only a handful of these type jobs out there and they probably worked very hard to attain that position. If you accepted any job at whatever rate of pay and then spent years working your way up to a better salary with great bonuses would you want other people to decide what is fair after the fact?
Trivial article 5/1/2009 2:13:00 PM Perks are 2% of CEO compensation. What's the point of writing about such a small part of the compensation? The median CEO compensation is $7.6 million of the 309 companies reviewed. That is significant spending. But even that is minor compared to the compensation for the top 300 actors, athletes, singers in the US. Yet the entertainers have negligible responsibility for driving economic output, employment, and delivering service and goods.
Private Sector ? 5/1/2009 2:25:00 PM I have no problem with the private sector giving big salaries and perks to the senior Management of a profitable private company, BUT the Board of directors that OK this compensation , must be HELD accountable that it justified and not just a short term profit at the expense of the company and the US taxpayer..this is what oversight is all about, make the corporate boards and Govt officials that are approving this accountable, with some VERY tough laws and you will not see this get out of control Again..at this point, nothing has changed, just good ole Boys sitting on each others Boards and approving everything for something in return, same thing in Washington, NO Change, same people that were in charge of oversight still in charge, Get rid of the BARNEYS that allowed the Oversight to run wild..Nothing wrong with the private sector, just how its controlled and regulated, nobody follows the rules and the Taxpayers are sick of it...
No more ridiculous than what Atheletes make 5/1/2009 2:30:00 PM Like the guy above said these "people are just people" and some of these people have run their companies into the ground. But this America and if some idiot is willing to pay out that much, somebody will be there to take it. It's no different in pro sports with 1st round draft choices receiving millions to throw a football or hit a baseball. If teams are willing to pay it, somebody will be there to collect it.
Offshore CEO's Are you kidding me? 5/1/2009 2:42:00 PM You want to send more jobs and money out of the US? Are you listening to yourselves here? Get the government more involved in private business and give other countries American jobs, what great ideas these are. Here's my paycheck, it's not much but maybe you can use it to buy a tape recorder and playback and really LISTEN to your foolishness. I'll never make in my lifetime the amount these CEO's make in a year, but I also do not want the government to make legislature that will be a spin off of the ignorance to what is really happening here. For example, the idea of cameras everywhere. It might make sense that it's great they catch theives, vandalism and kidnappers but what about your civil liberties? Do you like the idea of being watched as you go about your daily activities? Main point here, you open the doors and you really aren't thinking of what is behind them.
CEO perks rising 5/1/2009 3:32:00 PM It is ridiculous to give a prize to this kind of inept people, which went from failure to failure, making our country into this profound crisis, what they most deserve is to be fired for their lack of capacity, and ineptitude, they should suffer the consequences for their acts as all the American workers. President Obama has been staying short before making accountable these guys for all the financial crisis issues we are facing, and accommodating the politicians who tolerated such actions of happening, including Ex-president George Bush who with his complacency makes him as responsible as the others. We the Americans need to push hard to make real the fact that lack of achievement and poor performance will be punished no matter how high we are.
Athletes salaries 5/1/2009 3:34:00 PM I agree that their salaries are rediculous and because of that I don't attend any of the professional sport. If everyone felt like me toward them they wouldn't have a job.
Nothing will change 5/1/2009 3:38:00 PM Until a few of these guys get the Nancy Kerriganed.
CEO PERKS 5/1/2009 6:41:00 PM The real issue is total compensation rather than perks. The problem with excessive compensation is that it attracts more crooks than talented people to take over these jobs. Most businesses are gambles and becoming more and more so because public companies have no liabilities for their failures. A gambler with no liability should not be entitled to such compensation. Excessive athelete compensation is due to the fact that the cost of these are hidden by advertising revenues but the cost of advertising is passed to the consumer and an individual consumer cannot do much about it. If the majority of consumers stop buying products from companies that spend more than a reasonable amount on advertising, that may fix this situation. I for one almost never go to sports event and rarely watch TV.
AS THE SING IN THE AUSTRALIN PUBS 5/1/2009 9:01:00 PM This the Rich what get the gravy... and the Poor which get the blame !!! It's the same the wide world over... ain't it a bloody shame ! GAC San Diego
CEO Salaries 5/1/2009 10:07:00 PM Just give them the money, then bring back the old tax rates that went up to 90% or so. Maby then we could solve the medical insurance problem.
Corporate Elites 5/2/2009 12:41:00 AM I workeed for two major corporations where the executives would not even talk to those below their station. They all like whores and Corvettes, while robbing their corps. blind. The world revolves around them. That is why I started my own firm, and always take less in salary than my employees, to this day, and drive an old truck!
They get paid billions and are corrupt anyway 5/3/2009 2:00:00 AM My own company lost two very highly-paid CEOs in a row, one in a government scandal and one in a sex scandal. I believe that their excess compensation led to situational narcissism, thus turning two men who could have been very good CEOs into CEOs who surrounded themselves with yes-men (many of whom had previously been allowed to serve in the roles of trusted advisers). These yes-men not only told the CEOs that they were actually worth what they were paid, but also made sure that the CEOs had little access to real information. Cut off from their own companies (and sometimes even moving company headquarters to another part of the United States), the CEOs felt closer and closer to the heads of other corporations and increasingly distanced from their own direct and second-level reports. Status depended upon what the heads of other corporations thought, and especially upon how excessively each got paid. How well the CEOs managed their now-distant companies became less and less important at just the time that doing a good job became more and more difficult. After all, good management takes a long time to pay off, while compensation pays off immediately, not only in financial well-being, but also in prestige. It is my belief that "compensation consultants" are the parasites that have created this system. If CEOs are actually being paid the amount needed to retain them, then Boards of Directors should not need to hire "consultants" to figure out what that amount should be. One possible fix could include: (1)the banning of "compensation consultants", (2)the requirement that at least half of the members of the compensation committee be ordinary shareholders who are not on the Board of Directors, (3)a rule that no members of the compensation committee be permitted to serve more than two years in a row, and (4)a requirement that compensation for any position automatically be limited to 40 times that of the lowest paid individual, absent a positive vote for any recommended compensation above that amount by a majority of all share-holders (not just a majority of all voting share-holders). Moreover, those voting on behalf of others should be required to inform the actual shareholders of their votes on compensation issues.
CEO Perks 5/4/2009 9:05:00 AM I worked for a company some years ago where the CEO fired the CFO over a private jet. The CEO was tired of havin to hitch a ride with other CEOs in the greater Columbus area and wanted his own jet....public flights being somewhat degrading I suppose. The CFO said a private jet would be too expensive to maintain. Guess who won? Were it so simple to stop buying the products that pay those "robber baron" compensation package. I am no 60's radical, but by God I have had enough.
CEO compensation 5/4/2009 10:46:00 AM There is no doubt that there is room for an exceptionally able manager in most companies, and the board does have to make competative offers to secure their services. BUT, where is the other side--PERFORMANCE? All of this inflate compensation should rest on performance. No gain for the company, No big recompensation. No golden parachute to get rid of the bad ones either. Just gather your stuff and get out. After all that's what the rest of us have to do!
CEO Perks 5/4/2009 11:48:00 AM Plain and simple, it's time for the shareholders to revolt and oust the CEO and the Board that the CEO's control!
CEO Compensation 5/4/2009 1:23:00 PM These comments remind me of flap over Exxon’s record profit a few months ago. Exxon made a huge profit because they sold a huge amount of product. But their profit, as a percentage of sales, was about 10% which is a little better than the average US corporation but hardly looting and plundering. If you would actually take the time to read an annual report or do a bit of research you might actually begin to understand this issue. I found this information on the ALLCIO.org web site. Certain the unions are no friends of excess CEO compensation. Under the details for Occidental’s Ray Irani one finds that his base salary was $1.3 million with a bonus of $900,000, or actually cash compensation of $2.2 million. Not a bad living. However, the real money came from $27 million in stock options. Stock options are basically non-cash compensation and do not come out of your pocket; the price of gas did not rise so Irani could get a fatter pay check. Bill Gates is a perfect example of this. He did not get to be the richest man in the world by cashing his pay check every week, he became rich through Microsoft stock. Most CEO compensation packages contain relatively little cash but big stock options. So please try to learn a little about how business actually operates before whining and crying about compensation packages.
RE: lastCEO compensation comment 5/6/2009 10:04:00 AM This sounds like one of the receivers that is afraid of the tide of change. Exxon did not make their billiions from sales of huge amounts of product. They made their billions from price gouging to the determent of the US and word economy to it's current ravaged state.

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