Travel and security are the most common CEO perks.

Position:EXECUTIVE COMPENSATION
 
FREE EXCERPT

Not long ago, executive perquisites--or perks--were viewed as special benefits provided to specific individuals, typically in order to recruit or retain them. These benefits, often lower in cost relative to executive salaries and incentive packages, could make the difference in how an executive viewed the overall pay packages offered by companies competing for talent.

In the past decade, new rules requiring enhanced disclosure of perks have brought added scrutiny of these benefits, while the say-on-pay era has provided an avenue for investors to voice their concerns about perks they view as excessive. As a result, perk programs have largely evolved into arrangements designed to maximize the efficiency and work/life balance of the executive team, while providing risk mitigation for the company and its investors by providing executives with added security. In an era when the dividing line between personal and business time has become increasingly blurred, the classification of certain benefits as perks, versus a true business need, has become similarly problematic.

Eighty-two percent of the S&P 500 offered at least one type of perquisite to their CEOs, and 47% provided their CEOs at least three different types of perquisites. While many of the perks formerly provided to individuals have waned or vanished over the past several years, the continuing prevalence of perks shows that the majority of companies still value these offerings as an important benefit for their CEOs in a competitive market.

Transportation benefits are the most common perquisites provided to U.S. CEOs, with personal usage of corporate aircraft the most prevalent perquisite among CEOs in the S&P 500 (see chart). Of the 43% of companies in the S&P 500 that offered aircraft benefits to their CEOs, just over a third (36%) disclosed having a policy that required the CEO to use corporate aircraft for all business and personal travel.

A third of S&P 500 companies continue to provide a corporate car or car allowance for their CEOs. Clearly, ensuring the safety and security of the CEO while traveling remains important for companies. Providing a secure means of travel helps ensure that leadership is focused on company business with minimal distraction.

Financial planning benefits and executive physicals were the next-most popular perquisites after travel-related benefits. Today's corporate lifestyle is a far cry from the 9-to-5 routine, and companies...

To continue reading

FREE SIGN UP