The worst CEO perks

By Michael Brush

It's spring again. Your taxes are done. The flowers are in bloom. And corporate largesse is in the air.

Every April, public companies have to file proxy statements with the Securities and Exchange Commission, giving investors their best opportunity to see just how generous Corporate America has been to top executives.

This year, despite rumblings in Washington about greater disclosure and even -- gasp -- regulation of corporate pay, the perks are as offensive as ever. And those extra goodies came on top of an average 23% pay raise last year for corporate executives.

Here's our annual look at what America's royalty got in the way of perks last year -- all at shareholder (that is, your) expense.

Appetizers

How's this for a great part-time job? A $200,000 pay package and a $5,000-a-year wine allowance.

That's the deal given independent directors at UST Inc. (UST, news, msgs), which sells tobacco and wine. Chairman and former Chief Executive Vincent Gierer Jr. got $6,500 for his wine allowance, despite making more than $6 million. The company says the wine has to flow freely to "foster use of the Company's wine products at events supported by such directors."

"But shouldn't they want to do that anyway?" asks Michelle Leder of footnoted.org, which regularly exposes lavish corporate perks.

At Anheuser-Busch (BUD, news, msgs), execs enjoy unlimited free beer "for personal use and entertaining." In addition to being able to take friends and family along for a free ride on the corporate jet or for stays at company residences when on business, they also get unlimited free passes for themselves, friends and families to Anheuser-Busch theme parks such as SeaWorld in Orlando, Fla. They also get free haircuts. The top five Anheuser-Busch execs earned anywhere from $2.5 million to $10 million in salary, bonus and stock awards last year, so you'd think they might be able to chip in a little beer money of their own.

If they ever get tired of excursions to the company theme parks, they might consider packing some free Bud in the cooler, collecting the fishing gear and hooking up with execs at Oceaneering International (OII, news, msgs) for an outing. After all, Oceaneering execs enjoy free personal use of a "company-owned fishing camp" as part of their benefits.

The actual cost of such perks is low, but the fact that execs ask for -- and boards grant -- these goodies can be a symptom of a larger problem inside many U.S. companies. Executives and boards often form cozy cabals that shortchange shareholders because they allow executives to put their own interests first.

"It's not a question of dollar numbers, but of setting the tone," says Daniel Pedrotty, a corporate governance expert at the AFL-CIO Office of Investment. "When you see the board and the chief executive nickel-and-diming shareholders, it sends the message to shareholders that 'we aren't looking out for your interests but just lining our own pockets.' It says something about the degree to which they are putting shareholder interests above their own."

Health and welfare

Why bother being a CEO if you can't boss around a personal assistant? Last year, shareholders of Nuance Communications (NUAN, news, msgs) footed the $25,911 bill for a personal assistant used by Chairman and Chief Executive Paul Ricci, even though he got salary, bonus and restricted stock worth more than $6 million that year. Shareholders also coughed up Ricci's $3,896 tax bill on that and other perks.

Motorola (MOT, news, msgs) executives get personal health coaches. Motorola says it provides the coaches "because the health of our executives is critical to driving Motorola's success." The company also says it "provides various levels of health coaching benefits to all of its U.S. employees -- not just senior executives." You'd think Motorola's top managers could foot the bill for health coaches on their own. Last year, the six top execs each made between $2.5 million and the $11.8 million in salary other compensation pulled down by CEO Edward Zander.

"We're really getting to the point of ridiculousness with some of these perks, with entourages for chief executives who have their own personal trainer and dietitian, and the corporation is supposed to pick up the tab for all of it," says Patrick McGurn, special counsel for Institutional Shareholder Services, a firm that advises institutional investors on corporate governance issues. "There seems to be a sense of entitlement where they really want every expense to be handled by the corporation and its shareholders."

Continued: Free and friendly skies

 1 | 2 | next >