In addition to huge paychecks, the nation’s biggest corporate heads are also often receiving special treatment and perks that arguably cross the line of fair compensation for work performed. Like many corporate employees, executives receive pensions and 401(k)s. But that’s frequently just the beginning.
Often, they are allowed the use of the company jet for personal use, or are issued a personal security detail. In others, they are compensated for insurance, accounting and legal fees in the tens of thousands of dollars or more. 24/7 Wall St reviewed some of the most outrageous perks that companies give their already highly-compensated CEOs.
Many of the CEOs receiving some of the more exotic fringe benefits are closely tied to the history of their company. In some cases, their names are nearly as big as the corporate brand, and they have a great deal of power in setting the direction the company takes.
This may be why founders such as Oracle’s Larry Ellison make this list. Oracle paid more than $1.5 million in 2012 alone to provide Ellison with a personal security service, justifying the expense based on his value to the company. Wynn Resorts leases founder and CEO Steve Wynn a Las Vegas villa for him.
To identify the most outrageous CEO perks, 24/7 Wall St. reviewed compensation data for the 100 highest paid CEOs provided by FindTheBest. Compensation data accounts for all proxy statements filed by publicly traded companies with the U.S. Securities and Exchange Commission through Q3 2012. Examples of compensation that reflects CEO perks was based on a review of the most recent proxies filed by the 100 companies.
These are the eight most outrageous CEO perks.
1. Personal security
> 2012 value: $1,531,675
> CEO: Lawrence Ellison
> Company: Oracle Corporation
Larry Ellison, Oracle’s high-profile founder and CEO was recently thrust into the spotlight during The America’s Cup races in the San Francisco Bay Area. Team USA came from behind to win eight straight races to beat the New Zealand team. Ellison owns a great deal of real estate, including nearly all Lanai, the sixth-largest island of Hawaii. According to Oracle, the company required Ellison to install a state-of-the art security system in his home, “because of Mr. Ellison’s importance to Oracle.” Ellison paid for the installation and he pays for the upkeep of the system, but the company pays for the security personnel, a cost amounting to $1.53 million in 2012. The company also allows Ellison and family members to fly on a private jet Oracle leases from another company Ellison owns.
2. Private air travel
> 2012 value: $164,353
> CEO: David Zaslav
> Company: Discovery Communications, Inc.
David Zaslav came to Discovery Communications in 2007 from NBC Universal, where he helped launch both CNBC and MSNBC. Since his arrival at Discovery, Zaslav has received massive compensation packages, totalling more than $42 million in 2010, over $52 million in 2011, and nearly $50 million in 2012. Last year, in addition to a $3 million salary and more than $41 million in stock and option awards, Zaslav received more than $400,000 in other compensation, which was mostly related to travel expenses. Zaslav received more than $164,000 in benefits for personal — not business — use of a company aircraft in 2012. Zaslav is hardly alone in lavish air travel. Last year, the Hay Group told The Wall Street Journal that over two-thirds of CEOs at the largest 300 U.S. companies, by revenue, used corporate planes for personal use in 2011.
3. Life insurance/disability insurance premiums
> 2012 value: $100,000
> CEO: James Q. Crowe
> Company: Level 3 Communications, Inc.
Jim Crowe announced in April he would be leaving American telecom company Level 3 Communications after 15 years as CEO. The company quickly replaced him with then-president and COO Jeff Storey. The transition will take place at the end of the year. As of 2012, Crowe was one of the highest-paid chief executives in the country, earning more than $40 million, the majority of which came in the form of stock awards. The company also allowed Crowe reimbursement of up to $100,000 in life insurance premiums and long-term disability insurance. Crowe was also allowed to use the company’s aircraft for personal use.
4. Lease of a Las Vegas Villa
>2012 value: $451,574
>CEO: Stephen Wynn
>Company: Wynn Resorts, Ltd.
Steve Wynn is the founder, chairman, CEO of Wynn Resorts, one of the the largest casino operators in the U.S. Under a contract signed in April 2012, the company leased Wynn a company-owned villa in Las Vegas. The company estimated the fair value of the lease at $451,574 for 2012. Wynn had a base salary of $4 million in 2012 and total compensation, including bonuses and other compensation totalling $17.7 million. The total compensation awarded to each of the four other top executives in the company was at least $2.2 million last year. Wynn Resorts shares were down slightly in 2012, but they are enjoying a much better 2013 and are up nearly 60% year-to-date.
>2012 value: $6 million
>CEO: John Watson
John Watson became Chevron’s chairman and CEO in 2010 after holding various positions in the company, including vice chairman of the board, since 1980. Watson’s compensation was $32.2 million in 2012. This seems to have raised the concern of shareholders, who noted that GMI/The Corporate Library, an independent investment research firm, downgraded the company’s shares to a “D.” Some of GMI’s concerns included executive pay. Referencing GMI, a shareholder petition called the raise a “whopping 52% increase that included a $6 million pension increase.” Chevron was fined $19 billion in an Ecuadorian court for environmental damage. Some activists and shareholders have called for Watson’s removal as a result of the scandal. After a lengthy trial, there is currently a ruling pending in New York to determine whether the prosecutor in Chevron’s case fabricated some of the claims made against the oil company.
6. Financial planning
> 2012 value: $98,012
> CEO: Andrew Liveris
> Company: The Dow Chemical Company
Andrew Liveris, who joined Dow Chemical in 1976, became the company’s CEO nearly 10 years ago. He currently also serves as president and chairman of the company. Liveris received close to $23 million in total compensation last year, an amount that included more than $98,000 in financial and tax planning. In 2009, Dow was forced to finalize a merger agreement with Rohm & Haas, a company it had agreed to take over before the U.S. economy collapsed. Between the end of 2004, Liveris’ first year as CEO, and the end of 2012, earnings per share, dividend payments, and return on equity all declined.
7. Tax Assistance
> 2012 value: $221,013
> CEO: Robert Stevens
> Company: Lockheed Martin Corporation
Lockheed Martin former CEO Robert Stevens received more than $27.5 million in total compensation in 2012. Part of this compensation included more than $220,000 in tax assistance related to expenses Stevens incurred on company business. At the end of last year, Stevens stepped down as CEO, although he remains the company’s executive chairman. However, the transition was hardly smooth as the company fired his planned successor, Christopher Kubasik, for having an affair with a coworker. From the start of 2004, Stevens’ first year as CEO, through the end of 2012, the company’s share price rose from $51.40 to $92.29, a nearly 80% increase, compared to the S&P 500’s 30% increase over that time.
8. Legal fees in performance reviews
> 2012 value: $65,000
>CEO: Glenn Murphy
> Company: Gap, Inc.
The Gap CEO and chairman Glenn Murphy earned $24.6 million in fiscal 2012, although most of his compensation was dependent on company performance. The clothing retailer had been struggling for years, marked by store closings and long-term merchandising problems. A noted turnaround experts, made big moves when he was hired in 2007, including closing stores and refocusing on successful brands. In 2012, the company agreed to increase Murphy’s stock-based performance compensation. The company then reimbursed Murphy $65,000 for attorney fees he incurred while his compensation was being negotiated.