NEW YORK (AP) — Wynn Resorts kept a suite open all year at its tony Las Vegas hotel and casino for founder and CEO Steve Wynn, at a cost of nearly $452,000.
Former IBM CEO Samuel Palmisano was guaranteed an administrative assistant and furnished office for life as a retirement gift — plus a $1 million office renovation.
Chipmaker Advanced Micro Devices bought the house CEO Rory Read struggled to sell for $790,000 — and gave him another $180,000 to cover his underwater mortgage.
These are not uncommon extravagances in the exclusive world of CEO perks, replete with bodyguards, chauffeurs and private jets. Last year, the median value of perks received by CEOs of big public companies was nearly $162,000, an increase of more than 9 percent, according to executive pay research firm Equilar. Perks declined in 2009, but have risen for three straight years.
Perks are just a small part of CEO compensation — the median pay for CEOs of S&P 500 companies last year was $9.7 million. And some companies are cutting back on perks, or at least the ones that shareholders find most offensive. Still, they’re a reminder of how CEOs’ lifestyles are far removed from those of their shareholders, customers and employees.
Last year, companies paid for their CEOs’ country club memberships, let them use corporate planes for personal travel and gave them health care plans better than their employees.
Some corporate governance experts say giving perks to executives already making millions just exacerbates the public perception — fair or not — that they’re more interested in lining their pockets than helping the company.
“They might do without a plane,” says Brandon Rees, acting director at the investment office of the AFL-CIO union group, referring to CEOs’ use of company planes for personal travel. “And instead invest it in (research and development).”
Companies tend to defend perks as legitimate business expenses that ultimately benefit shareholders: Flying on private planes keeps the executives safe. Country club memberships help them network. An attractive package helps a company lure the best talent.
“It is in the company’s best interest if that person doesn’t have to think about daily things as much as you or I might need to,” says Jay Meschke, president of CBIZ Human Capital Services, a compensation and human resources consultant outside Kansas City, Mo. “You want to make sure that 100 percent of this person’s efforts are devoted to the company’s success.”