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What Do You Think About Executive Perks?

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Private JetOne of the hot-button issues today is the difference between what the “top 1%” get, and what the rest of us end up with. There are few places where the differences are as stark as when it comes to executive pay and perks, and the salary and benefits of “regular” workers.

CEO pay has been on the rise over the past few decades, growing at a faster pace than worker pay. Indeed, CEO pay is 380 times the average pay of workers, while in 1980 CEOs earned 40 times the average worker’s pay. That rise is one of the reasons that are so unhappy with the current state of things. On top of the pay, many executives also receive huge perks.

Kiplinger put together a list of 8 executive perks. These include:

  1. Birthday Party: Tyco picked up half the tab for a $2 million birthday party thrown for an executive’s wife.
  2. Non-Compete — After Death: One executive is promised $15 million plus interest if he leaves and doesn’t complete, even if he is dead. The non-compete bonus is in effect for two years after his death, so his heirs get the perk if he remains silent in his grave.
  3. Housekeeping for retired executive: Tyson Foods reportedly provided housekeeping services for its retired CEO, with the employees themselves doing the dirty work. The company even paid some of his personal credit card bills after his retirement.
  4. Company Jet: The company jet is a regular perk, but one Qwest executive was able to get an agreement that his family could use the jet, even if he wasn’t present on the plane — something that isn’t very common. Qwest even bought the executive’s home. Steve Jobs not only had his own private plan outright, but he also received reimbursements for using the plane for company business.
  5. Tax Subsidy: Occidental Petroleum reportedly paid state taxes in California for one of its top executives. However, many people don’t realize that when someone else pays your taxes, it’s considered income tax. So the company had to pay taxes on the taxes it paid.
  6. Private Security: Oracle paid Larry Ellison’s home security costs, paying to monitor his residence, as well as paying for security personnel.
  7. Sports Seats: Apparently, GE boss Jack Welch received a number of sports-related perks, including floor tickets to Knicks games, sky box for Red Sox games, and VIP seating at the French Open. Not bad for the sports lover.

These kinds of perks, in the minds of many in the middle class, only add insult to injury. After all, many of these executives make millions of dollars each year (although Steve Jobs had a salary of $1 a year). They have stock options, and access to other types of compensation. Over the top perks only seem to throw into sharper relief the differences. Ordinary workers might receive vacation days and health insurance, but those employment perks pale in comparison with what top executives are getting.

What do you think? Do executives deserve fabulous perks? Are they really making the kinds of decisions that entitle them to such treatment? Or are these perks over the top?

(Photo: Justortitri)

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41 Responses to “What Do You Think About Executive Perks?”

  1. Shame on the Board of Directors for signing off on such ridiculous things. These CEOs are compensating well enough in salary and stock options already to be able to afford to pay for these perks themselves. They are in effect stealing profits from the shareholders.

    • tom says:

      How are they stealing from shareholders when the shareholders vote for joins the board?

      I vote for the Board of Directors to get the best possible CEO money can buy. If the potential CEO wants his/her house cleaned and they have a record of increasing shareholder value, pay an army of maids!

      • Demi says:

        Tom…that is the key…increasing shareholder value. In the past 4 years, how many companies increased shareholder value through sales and earned income for the company and NOT via the $877B taken from the taxpayer to keep the companies afloat OR tax write-offs through loopholes provided by the federal govt?

  2. tom says:

    Good for them for negotiating these things. If you want a top CEO, you had better be ready to pay for one.

    CEOs are like highly paid, famous athletes. There are only so many to go around and they are all in demand. Of course their perks are going to be ridiculous and awesome.

    I don’t begrudge these guys any of the things they’ve earned. And believe me, they have earned them.

    I look forward to, one day, enjoying some of these.

    • skp says:

      Yes, “good for them for negotiating these things”. But I disagree completely that you need to pay so much for a top CEO, like Dennis Kozlowski of Tyco fame.

      If what they were paid were primarily based on performance I might be ok with it but it very rarely is. Many CEO’s have golden parachutes so that it is incredibly expensive, hundreds of millions, to fire them. How are the boards of directors looking after shareholders and the company by allowing that?

      I don’t begrudge what they’ve earned, I just disagree with what they think they’ve earned.

      • tom says:

        If shareholders aren’t happy with the Board, they have the power to fire them.

        Problem is that shareholders are people and are too lazy to vote. If I was an institutional investor, I’d be voting every time. If a CEO was given an absurd package and did a crappy job, I’d fire the board.

        • Scott says:

          Problem is many shareholders are looking for a quick buck nowadays and not an investment in a company they believe in. The general mindset of investing has changed a lot over the past 50 years.

  3. Rick Francis says:

    I don’t see how CEOs are worth more than 380 average workers, let alone the perks…

    I think most companies would be far better off paying the CEO half the salary and getting an extra 100 above average employees.

    -Rick Francis

    • Ted says:

      You pay a CEO half the salary and you’ll end up with half a CEO. And half the quality. And half the profits. And a stock price chopped in half. And those extra 100 above average employees, plus 200 more, are shown the door.
      Pay the CEO what you think he is worth. If he does the job, everyone wins. If he doesn’t, show him the door.

  4. skp says:

    I agree with The Biz of Life, shame on the board of directors. The problem seems to be the incestuous relationship between executives and the board, after all who sits on the boards of major companies? Executives, current or retired, so essentially they’re giving themselves raises and other perks… It’s gotten much worse in the last 2-3 decades.

  5. I say good for them for negotiating it. I imagine most of their time is consumed by their businesses. Do I wish it wasn’t so different from standard perks or regular employees could get these perks? Totally!

  6. Jason says:

    Americans need to stop demonizing Executives. A CEO is the private equivalent to a General in the Army. Without someone truly brilliant at the top, the entire organization can fail.

    I would take 1 General Patton over 380 infantry in a war anyday, and a CEO is no different.

  7. Demi says:

    There are professional negotiators out there that all they do is negotiate on behalf of CEO’s et all. Most have a law background with an undergrad in biz. Very wiley, smart, wrangler people. They are well paid for their services with many taking a percentage of the deal they can make. Not much different than a players rep in b-ball or f-ball. I fault the members of a board for such high negotiated packages. I favor a cap placed on what companies can spend on executive compensation packages across the board because ultimately that money comes out of my pocket as a stock holder. And when the company goes bad…the CEO package should sink with it. Fair is fair.

  8. Nice article on a frustrating topic. On one hand I agree that a CEO should make as much money as they can and do work hard. I don’t begrudge their pay.

    On the other hand, something is off in that they are paid 380 times an average worker. This clearly is not logical and is not due to their value being this much more. I’ve worked with many CEOs who are smart, hard working, and valuable – but saying they are worth that much more is ludicrous (I’m sure they would even say so in a honest moment).

    Wish I had an answer, but believe the shareholders should determine the board members who set the CEO’s pay. For the government to step in and mess with this is a form of tyranny.

    One option could be a shareholder vote on CEO pay and benefits required for all public firms so that it is visible to all shareholders and not a closed room deal that people find out about later…

  9. Demi says:

    Look up what CEO’s of Japanese companies make. You won’t see anyone close to 380 times what the highest paid worked at a company in the US makes.

    Here’s a clip from an article: “BusinessWeek reports that the disclosures reveal that the average compensation of a Japanese CEO is less than one-sixth that of their American counterpart and 16 times more than the average Japanese worker”.

    Here is the full link: http://thinkprogress.org/politics/2010/07/08/106536/japanese-ceo-american-sixth/?mobile=nc

  10. I think successful executives deserve large amounts of compensation for the amount of value they provide companies (leadership, direction, experience, growth, lawsuit protection). But, failing executives should not get much compensation.

  11. mannymacho says:

    This, along with the news of the CEO who held the job for 8 hours and received $44 million. Whether the CEOs merit the perks or not, they do not do much to dispel the widely held image that they are greedy and disconnected sociopaths.

    • zapeta says:

      You hit the nail on the head – greedy sociopaths. In the past CEO’s weren’t paid 380 times what a normal worker made and didn’t receive ridiculous perks, and the corporations they ran did just fine. CEO pay and perks should be slashed.

  12. It’s easier to negotiate these types of perks than most people think. It doesn’t matter if you’re the CEO, an Executive or even Middle Management. Knowing HOW to ask for these perks is more important than WHAT you ask for most of the time.

    I know non-executive level employees (including me) who used integrative bargaining techniques to get a suite for their favorite sporting events, car leases, housekeeping services, lasik procedures, complete wardrobes, new home entertainment systems and other perks.

    Far too many people focus on just salary/pay and miss out on opportunities to get things from their employer.

  13. daenyll says:

    I think that ceo compensation should be linked to Long-Term performance, not just short term where they can push up profits by taking huge risks then walk away before the time bomb blows up.

  14. I definitely think CEO’s deserve to be paid a ton of money and I think a good one can definitely be worth 3-400 employee’s salary. I bet there are 3-400 employees at my company who could be gone tomorrow and work wouldn’t skip a beat :)

    That being said, there are a lot of bad ones out there and they are the ones we need to find a way to get rid of and limit their salaries.

  15. Mike says:

    The perk that bothers me is at certain airports where TSA provides an special line through security for first class passengers. I can understand that someone pays extra for a first class ticket and the airline provides special treatment, but TSA is a government provided service, and should be equal for all.

    • shckr says:

      Hello Mike,
      I have to admit that while I feel a little embarrassed sometimes as I cut straight to the front of the line, I dont actually pay for a first class ticket, I just fly so much that I get the status. However, the fact that they do provide this service allows me to to leave my house 30 mins later, in the morning. That difference means that I get to see and have breakfast with my son. Multiply that times almost 150 travel days a year (roughly 75 leaving my house) and I sure am grateful. Though I never thought about who was paying for it…..

  16. DonC says:

    It’s easy to pick on CEOs since they make so much money and we don’t. Why stop there? Let’s pick on sports players and Hollywood actors. Look at the perks they get and the millions they get for the work they do. They don’t work the hours a CEO does and they don’t have the nearly the same level of responsibility as a CEO does. Most athletes and actors didn’t spend coutless hours in school and working their way up a corporate ladder. Don’t get me wrong. I don’t begrudge athletes or actors, they work hard in a different way and sell entertainment and merchandise. They get paid the way they do because someone thinks there is value there. I think most (not all) of the CEO compensation criticsm may come from jealousy and for not understaing the value they can bring a multi billion dollar company.

  17. Matt M says:

    Companies have to compete with other companies to keep executives, these perks help companies gain an edge, so I am fine with them.

  18. Shorebreak says:

    Labor costs decrease profits for a corporation. With less workers there is higher productivity per worker. The more workers the corporation lays-off, or when workers are paid less for wages and benefits, the higher the profits and the more the CEO is compensated for reducing costs. Thus, share prices rise when corporations shed workers and the holders of those shares are happy.

  19. These perks to me are reminiscent of the ruling class attitude that ultimately led to the July 1789 storming of the Bastille in Paris and the French Revolution.

  20. Tat-2 says:

    Just another thing that makes the U.S. a crappy country….

  21. Daniel says:

    I’m not very concerned with executive perks, but I am extremely concerned with Congressional perks.

  22. Quinton says:

    I guarantee you I could go get 10 homeless people in a park and find at least 1 of them that would be better for a company than most Public CEO’s. And another 3 of them would be better decision makers than some of these companies VP’s.

    The days of “decision making” for most Public CEO’s are over.

    They are spokespeople, nothing else. They are not “Generals” leading the organization into combat. The direction of the company is set for them by their board.

  23. Paul Knudsen says:

    I have no problem with perks, provided the executives create value.

  24. Kelly says:

    I think these perks are ridiculous!!!! Not to say that the excutives don’t deserve to be paid well and have a few perks, but for a company to pay half of the bill for an excutive’s wife’s $2million dollar birthday party (which no one in the world should even have) except maybe the president or the Queen of england or something or pay for housekeeping for them when they already make so much they could pay for these things themselves and never miss that money and to not have to pay taxes (when they can afford that too)is absolutly ridiculous!!!! and I partly agree with Don C about why just pick on CEO’S because If you ask me athletes AND actors also make WAAAY to much money. These kind of things are the reason that everyday, hard working people that are actually building the world and doing the real HARD work of the world(that others think THEY’RE to good to do) can barely make it from pay check to pay check and barely eat, pay their bills and have gas to even get to and from work, much less anything else (like health insurance) and I think it’s really sad and backwards. If it wasn’t for the middle and lower class workers of the world ( who don’t mind getting their hands dirty ) what would the world REALLY be like and who would do the dirty work? Probably not the CEO’S and athletes and actors I’m sure because they would think they’re too good. These people are NOT GOD and I’m sure they can be just as easily replaced by people who could do just as good of a job as anyone and would be so THANKFUL to have it that they would be happy with just the saleries alone that the CEO’S make. Oh yeah, and by the way, Tom and Financial advise for young professionals, I think YOU’RE ridiculous too!!!!!! I’m really glad I don’t have to answer for you guys and the people that let these kinds of things go on in the world when the time comes. I will pray for you.

  25. Richard says:

    Do you really believe they work 10,000 times harder in one hour than you do? Do you really believe they arrive at their decisions without others input? Do you really believe God thinks they are more entitled to what He created than you are?


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