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  Perks For Executives, but What About Us?
Perks For Executives, but What About Us?
Use of a corporate aircraft is one of the most common benefits offered to executives, but company-paid perks and benefits such as home security systems, country club memberships, loan forgiveness, and tax payments are also common.
 

-By Kim Taylor, Salary.com

Executive perquisites ("perks") are alive and well. A Salary.com review of 2004 proxy filings reveals that some executive perks exceed the average employee's total income and others exceed the cumulative lifetime incomes of those employees. Use of a corporate aircraft is one of the most common benefits offered to executives, but company-paid perks and benefits such as home security systems, country club memberships, loan forgiveness (not to mention the original loans), and tax payments are also common.

A Sampling of Executive Perks
Company Name
Executive
Benefit
Value
Apartment Allowance
$37,824
Company Plane
$40,138
Country Club Fees
$99,741
Home Security System
$104,240
Company Plane
$305,403
Payroll taxes
$5,722,607
Forgiveness of loan $6,921,244
Forgiveness of loans
$7,406,563
Company Plane
$198,015

Sources: SEC Company Filings

In some cases, these executive perks are quite valuable. Perhaps they are more interesting now, because the value of new stock option grants (often the largest component of executive pay) has been declining. According to a report by WorldatWork, the value of these options has declined nearly 60% between 2001 and 2003. Of course, this decrease is sometimes offset by an increase in restricted stock awards and other long-term incentives. Sometimes, however, the value of "other compensation" including perks is substantial.

But what about the average worker? Fortunately, as the economy begins to recover, companies looking to recruit and retain talented employees are once again offering company-wide perquisites, this time in the form of benefits supporting work-life balance. Some of the new offerings, including pet health insurance, mortgage assistance, and on-site services such as dry cleaning and massage therapy, are unlikely to become as prevalent as the more traditional offerings such as health insurance, but are going a long way in making employees happy.

Sample perks for executives vs. average employees
Sample perks for executives
Sample perks for average employees
Above-market interest on deferred compensation
Airline mileage programs (keeping your work miles)
Club memberships
Cafeteria/subsidized meals
Company car
Casual dress
Executive loans
Commuter subsidies
Financial planning services
Computers for personal/home use
Home security systems
Concierge services
Leadership development programs
Dry cleaning services
Legal planning services
Education benefits
Limo services
Employee discounts
Loan forgiveness
Financial/legal services
Payment of taxes on certain perks and benefits
Fitness programs
Personal assistants
Frequent flyer clubs
Room and board allowances
Massage therapy
Security guards
Professional memberships
Sports/event tickets
Referral bonuses
Supplemental health and retirement benefits
Use of company plane

What perks would be important to you if you were an executive? An informal survey of visitors to Salary.com's website indicates that annual incentives and signing bonuses would be the most desired, receiving 47.1% and 41.2% of the votes, respectively. Interestingly, 35.3% of respondents felt that use of a company airplane would not be an important executive perk. Other highly-valued perks for workers include: flexible work hours, child care support, professional memberships and education, and subsidized fitness memberships. It seems that the typical individual is focused on cash-based and work/life benefits versus the more luxurious benefits of executive perks.

The question on everyone's mind then is "Are these executive perks really necessary?" After all, executives are usually the most highly compensated employees within a company. However, many compensation experts feel that these perks are doled out in the spirit of good business. There are two sides to this situation. Certainly, the executive perks, such as personal use of the corporate plane, are sometimes expensive luxuries that do not have a direct business purpose. But, in the example of use of the corporate plane, the cost of those trips is disclosed and treated as compensation. So David Dorman's use of AT&T's corporate plane was not just a gift. It was simply an additional $305,000 of income ("imputed income") for which he had to pay taxes. The only benefit to him is that he has access to the jet, which most other employees do not. Likely paying $10,000 or more per flight "out of pocket", this is a benefit that most of us would not use even if we did have access to the company plane.

The financial perks, while again just another form of compensation, do tend to rub people the wrong way. Payment of taxes, forgiveness of loans, and above-market interest payments are all perks that any of us would be happy to receive from our employers, but are rarely, if ever, offered below the executive ranks. When Peter Brown of AMC Entertainment received close to $5.8 million to cover payroll taxes on top of the $6.9 million of forgiven loans, the average AMC employee probably sarcastically asked, "Why don't they pay my income taxes too?"

For the non-executives out there who are looking for a little something extra, keep in mind your position in the organization and your employer's philosophy regarding perks. If you are a sales person, you might be able to get assistance with a country club membership to entertain potential customers. Other employees should probably focus on more realistic perks like flexible work schedules, educational benefits, a lap top computer, company cell phone, or other things that will improve your professional and personal life. Now see how your executive is compensated with Salary.com's Executive Compensation Wizard.

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