For CEOs, the perks keep flowing

The public outcry over corporate jets and other executive perquisites intensified last year, but that didn't ground top brass at Dana Holding Corp. The Toledo, Ohio, auto supplier, which emerged from Chapter 11 bankruptcy protection in January 2008, spent $2.3 million last year on chartered planes to fly its chairman and chief executive, John M. Devine, and its vice chairman and former CEO, Gary L. Convis, to and from their California homes, according to its latest proxy statement. Despite investor grumbling, U.S. companies continue to subsidize a wide array of benefits for their top executives, from round-the-clock personal security to country-club memberships, top-flight healthcare, sporting-event tickets and personal use of corporate-owned retreats, according to The Wall Street Journal CEO pay survey. "When push comes to shove, companies didn't make as many changes to these programs last year as shareholders would like," said David Wise, a senior consultant at Hay Group, which compiled the Journal's survey. A public backlash against executives flying in private jets erupted last year when the CEOs of the Big Three U.S. auto makers were excoriated by members of Congress for flying private jets to Washington, D.C., to appeal for government aid. The perk was common last year: 104 of the 200 companies in the Journal survey covered the cost of personal air travel by their CEOs in 2008, down only slightly from 107 in 2007. The median value of the perk jumped to $115,500 from $79,000, probably because of higher fuel prices, Mr. Wise said. Other jet-setting CEOs included James M. Bernhard Jr. of Shaw Group Inc. and Lewis B. Campbell of Textron Inc., who amassed $642,500 and $590,400, respectively, in personal air-travel expenses. A spokeswoman for Shaw Group declined to comment. Textron, which owns Cessna Aircraft Co., said that private and public use of business jets by Textron executives "increases their productivity and provides a competitive talent attraction and retention advantage." The spokesman added that "it also serves as an extremely important example to showcase the real-life efficiencies and other benefits to potential customers." Dana sold its six corporate aircraft to cut costs before and after entering Chapter 11 in March 2006. Company spokesman Chuck Hartlage said directors agreed to pay for Messrs. Devine and Convis's commutes to lure the seasoned auto executives out of retirement. He said the executives' total direct compensation last year, not including benefits, which is valued by the Journal at $8.5 million for Mr. Devine and $6.2 million for Mr. Convis, is "very much in line with similarly situated peers." Dana also reimbursed the pair for more than $43,000 in taxes associated with the travel expenses, highlighting another controversial benefit: tax "gross-ups" on perks. Proxy adviser RiskMetrics Group Inc. recently added "gross-up" payments, which cover the taxes owed by executives for employer-provided perks and other benefits, to its list of poor executive-pay practices that can prompt it to advise against directors' reelection. This week, for example, it recommended that Dana shareholders withhold votes for compensation committee member Jerome B. York over the gross-up issue. "The tax reimbursements, like the air-travel benefit, were part of the board-approved employment agreements," said Mr. Hartlage of Dana. He said Mr. York is "aware of the story" but didn't return a request for comment. In the Journal survey, 76 companies disclosed some form of gross-up for chief executives, down from 77 in 2007. The median value of such payments fell to $16,400 from $22,350. Oil-field services provider BJ Services Co. spent the most on gross-ups, reimbursing CEO J.W. Stewart $718,800 for the taxes on his bonus and certain equity awards. A BJ Services spokesman was unavailable for comment. Other popular perks include security and financial advice. Occidental Petroleum Corp. CEO Ray R. Irani, whose total direct compensation of $49.9 million ranked second among CEOs in the compensation survey, also received security valued at $575,400 and financial planning valued at $403,300, according to the company's proxy statement. Occidental spokesman Richard Kline called security "a necessity" for Dr. Irani, adding, "Executives from oil and gas companies have been threatened, abducted and killed." The financial-planning assistance allowed Dr. Irani "to keep his complete attention on the company's business and performance," Mr. Kline said. Ferro Corp., a Cleveland maker of industrial coatings, reimbursed CEO James F. Kirsch for a $100,000 initiation fee at the Pepper Pike Country Club. The board had suggested he join "to enhance networking opportunities with other Cleveland area CEOs," according to Ferro's proxy statement. The company declined to comment further. Robert A. Young, the chairman and former CEO of shipping-services company Arkansas Best Corp., received perks valued at $58,449 last year, including an undisclosed amount for personal use of the company's hunting lodge. An Arkansas Best spokesman wasn't available for comment. The survey found 27 companies that discontinued at least one perk for their CEOs last year, compared with 35 companies that killed perks in 2007. Steve Sabow, Hay Group's director of executive compensation research, said companies eliminated benefits that stood out as "unusual." Mr. Wise, of Hay Group, expects more companies to eliminate executive perks in 2009 in response to mounting criticism of executive pay. One company trimmed perks after an unusual shareholder revolt. InfoGroup Inc., an Omaha, Neb., database concern, sold its corporate yacht for $1.5 million in October 2008 after a shareholder suit alleged abusive personal spending by founder Vinod Gupta, according to Securities and Exchange Commission filings. Mr. Gupta resigned as CEO last August and agreed to repay $9 million. But he received a $10 million severance package and remains on the company's board, according to the filings. Mr. Gupta couldn't be immediately reached.