Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
By Che Odom
Jan. 27 — About 40 percent of S&P 500 chief executive officers—including those for Walt Disney Co., Starbucks and Tyco—use company-owned aircraft to get around, according to a Jan. 27 report by Equilar.
The median value of the aircraft perk was $65,316 for all named executive officers in 2014, while the top disclosed aircraft perk was $1 million, the report said. It added that many companies say their CEOs must use the corporate jet for security reasons.
For example, Walt Disney said in a Jan. 15 proxy statement that its CEO, Robert Iger, “is required for security reasons to use corporate aircraft for all of his personal travel.”
Equilar, an executive compensation research firm, found in a review of the proxy statements of S&P 500 companies that the popularity of aircraft perks for CEOs from 2012 to 2014 remained stable, after a dip from 2011 to 2012.
In 2014, 38.6 percent of CEOs in the S&P 500 received an airline or aircraft perk of some value, the Equilar report said.
Starbucks Corp. disclosed in its 2016 proxy statement that CEO Howard Schultz reimbursed the company $96,523 for his personal use of company-owned aircraft, in a transaction approved by the audit committee.
According to the proxy statement, Starbucks in 2013 entered into an agreement with an entity owned by Schultz for use of an aircraft, paying $269,297 monthly rent for it.
Starbucks also entered into a hanger-space lease with an entity owned by Schultz, agreeing to pay $282,482 in 2015, the statement said.
Calls to Starbucks for comment were not immediately returned.
Among other companies that provide an aircraft perk:
Similar to perks involving aircraft, automotive perks for CEOs have remained stable since 2012 after shrinking in popularity in 2011, the Equilar report said.
According to the report, in 2014, 37.3 percent of CEOs in the S&P 500 received an automotive perk, while the prevalence of this perk for other named executive officers over the last four years has slightly declined, dropping 4.1 percentage points since 2011.
Jim Kroll, a director in Willis Towers Watson's New York office, said in the Equilar report that when companies were forced to hold say-on-pay votes, they began trimming compensation packages of “low-hanging fruit” that could present potential problems with shareholders. These included automotive perks, he said.
“[I]f a company were to disclose a benefit that appears large and is not transparently communicated, we may hear a grumble from shareholders or proxy advisors,” Kroll said. “But if a high expense is paid under the terms of a company-wide policy that would soften some of the blow.”
Kroll could not be reached immediately for comment.
To contact the reporter on this story: Che Odom in Washington at email@example.com
To contact the editor responsible for this story: Yin Wilczek at firstname.lastname@example.org
The Equilar report is available at http://www.equilar.com/reports/31-executive-benefits-and-perquisites.html.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)