For the average worker, the term "benefits package" usually brings to mind cash compensation which may include salary, bonuses and stock options. However, once one ascends to the executive ranks the packages change substantially. Upper level managers, particularly chief executives, are often privy to an exclusive set of non-cash benefits. These perquisites, more commonly referred to as perks, may not be cash, but they can be valuable. Here are some common perks enjoyed by CEOs.
IN PICTURES: A Bigger Salary Or Better Benefits?
Financial Counseling and Tax Preparation
Due to the complex nature of their compensation packages, chief executives are often provided with tax preparation services paid for by their employers. Occidental Petroleum (NYSE:OXY) paid over $400,000 in 2008, for professional services to handle CEO Ray Irani's financial issues. (Having a professional do your taxes isn't just for CEOs. Find out more in Choosing A Tax Preparer.)
Many firms recognize that their CEOs need protection, which may come in the form of personal security details and home security monitoring services. The overall trend in spending on CEO security has been downward in recent years. However, one CEO bucking the trend is Howard Schultz. Security for the Starbucks (NYSE:SBX) chief rose 25% in 2009.
The executive suite often comes with freedom to select executive décor, and the company foots the bill for each executive's fancy furniture. Former Merrill Lynch CEO John Thain made headlines in 2008 for adorning his office with over $1 million worth of pricey furnishings. Thain's indulgence reportedly included an $87,000 area rug and a $1,400 trash can.
Cars and Drivers
Despite media attention paid to corporate jet travel, many CEOs are provided with ground transportation perks including company cars, privileged parking or a car and driver. According to MarketWatch, the tab for car and driver service provided to Macy's Inc. (NYSE:M) CEO Terry Lundgren topped $261,000 in 2009.
Last month, SEC filings revealed that Abercrombie & Fitch (NYSE:ANF) actually paid CEO Michael Jeffries to limit his personal use of the company jet. Jeffries was due to receive a $4 million lump sum payment for signing the agreement; he will keep the entire sum as long as he stays with the company until February 2014. (If you're a long-time air traveler, you've probably noticed that flying means pulling out your wallet a whole lot more often. Find out what's fallen off the list of airline freebies in 7 Air Travel Perks That Used To Be Free.)
Country Club Fee Reimbursement
Overall, instances of this long-standing perk appear to be dwindling, however some companies still foot the bill for such social and leisurely activities. One commonly provided excuse for footing country club fees is that consorting with fellow executives can help build business and new relationships. In 2008, Mattel (Nasdaq:MAT) paid an estimated $150,000 initiation fee for CEO Robert Eckert.
Gifts for the Road
By way of retirement benefits and pensions, some CEOs manage to collect bigger paychecks after their jobs are done. In 2009, Former Cigna CEO Edward Hanway departed the company with a retirement package reportedly worth over $110 million. Jack Welch, formerly of General Electric (NYSE:GE), made headlines due to the retirement package he negotiated prior to leaving the company. Welch left GE with a plan paying $8 million per year, and maintained access to all of the perks on this list except country club fees.
Welch eventually relinquished the bulk of the perks after details were revealed and met with considerable criticism. (Despite the record losses that occurred in the financial sector, many executives still received huge bonuses. Learn more in When Wall Street Loses, CEOs Still Win.)
It's Good To Be the Boss
Special treatment and privileges are often reserved for high level employees and members of any organization. While the perks in this list may be considered normal in executive circles, members of the general public tend to disagree. While public disdain may have caused some companies to scale back executive compensation in recent years, CEO perks remain in a class of their own.
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