Executive perquisites have been subjected to pretty intense scrutiny of late. Not surprisingly, this is having a significant impact on the entire perk landscape.
In an effort to examine and help us grasp the nature of this shift, Hay Group has reviewed (see article Executive Perquisites: A Changing Landscape) has reviewed the practices (via proxy disclosure) of the WSJ 200, a sample of 200 companies with revenues $5 billion or greater examined for the WSJ/Hay CEO Compensation Study.
Findings of the review include the following:
The five most common perks are:
- Personal use of corporate aircraft (66% of sample)
- Financial/tax/estate planning (58% of sample)
- Company cars/allowances/leases (52% of sample)
- Tax gross-ups (46% of sample)
- Personal physical exams (40% of sample)
Hay believes the following perks are those most likely to remain a component of executive pay packages, because they help executive officers be more productive and efficient and they serve to protect the company and its officers from business risk and threats:
Personal aircraft usage – allows executives to reduce their travel time and have more time to devote to their work duties.
Company cars – in particular, for the CEO and key executives, enhance their personal security when coupled with a chauffeur or security driver, and also enable a more efficient use of time.
Physical exams – helps key employees remain in good health, forces them to pay more attention to their well-being and helps preserve the company's investment in its executives.
Going forward, which perks are most likely to pull a disappearing act? In examining a "constant sample" of companies (160) and their change in practices from their 2008 to their 2009 proxy statements, Hay reveals the following notable decreases in prevalence:
- Club membership (overall) - down from 43% to 35% of sample
- Financial planning - down from from 58% to 51% of sample
- Tax gross-ups - down from 54% to 47% of sample
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