It's annual-meeting season, which means shareholders are about to get their once-a-year look at the pay and goodies given to corporate top dogs as disclosed in company proxy statements.
The multimillion-dollar pay packages will make headlines, but shareholders should also mind the little things. While some perks are merely outrageous because they're given to executives who earn vast fortunes, others have proved to be a sign of executive larceny and lax oversight by a company's board of directors.
Here are eight of the most outrageous perks given to U.S. executives in history -- some long gone and some remaining.
$2 Million Birthday Party
When Dennis Kozlowski's second wife hit the magic age of 40 in 2001 -- only a few months after they wed -- the former Tyco chief went all out. He threw a weeklong Roman-themed party on the island of Sardinia -- replete with scantily clad models, chariots and an ice-sculpture vodka fountain made to look like Michelangelo's David. Tyco, now based in Switzerland, paid half of the $2 million tab.
Tyco also paid for Kozlowski's dog-shaped umbrella stand ($15,000), a gold-plated waste basket and artwork in his mansion -- but apparently not with the company's knowledge or consent. Four years later, Kozlowski was convicted of grand larceny for misappropriating millions in shareholder assets for his own benefit.
Post-Mortem Non-Compete
Companies are sometimes willing to pay executives vast sums for promises not to compete or divulge company secrets when they change employers. But Baton Rouge-based Shaw Group wants CEO James Bernhard to keep that promise a little longer than normal -- two years past death -- and is willing to pay dearly for his silence in the grave.
According to the company's most recent proxy statement, Shaw will pay Bernhard -- or his heirs -- $15 million (plus interest) when he leaves for his promise not to compete -- even if he can't compete because he's dead.
Housekeeping
Don Tyson retired in 2001, but Tyson Foods was so grateful for his past leadership that it financed vacations for Tyson and his close friends, paid their personal credit-card bills, and allowed him to charge unusual purchases -- such as an $8,000 horse and a $20,000 oriental rug -- to the company.
But perhaps the most objectionable perk was having Tyson company employees clean Mr. Tyson's house and mow his lawn. According to a 2005 SEC settlement, Tyson Foods spent $203,675 having employees clean five different homes owned by Don Tyson, his family or friends. The company, headquartered in Springdale, Ark., also sprang for $84,000 in lawn-maintenance costs for the same five homes.
Flying School Bus
Executives are often given the right to use the company jet for pleasure travel, but their spouses, children and friends are usually only allowed to use the plane when they're accompanying the employee. But Edward Mueller demanded an exception to that rule when he became CEO of Denver-based Qwest in 2007.
His employment agreement gave his wife and daughter the right to use the company jet to commute to and from California, where his daughter was still in high school. The phone company expensed $281,182 that year for Mueller family joy rides on the jet and ended up buying his California home for a $1.8 million premium to its resale price, too.
Tax-Free California
When Ray Irani moved to California to take Oxy's top job, he was apparently horrified by the Golden State's high income tax rate. So in 1991, Irani struck an employment deal that required Oxy to pay his state income tax bills.
Over the course of the next six years, the Los Angeles-based energy company shelled out $5.8 million to pay taxes for Irani. But the problem with paying taxes for someone is that even the tax payment is taxable. There's also tax on the tax on the tax, making this one of the most egregious corporate perks in America. Occidental, long a target of pay critics, responded to shareholder objections by paying Irani a lump sum of $95 million in 1997 to buy out his contract and rescind the company tax subsidy.
Flying Cash Cow
In 1999, Steven Jobs was "interim CEO" of Apple Computer, having returned in 1997 to the then-struggling company that had fired him a decade earlier. Directors were so grateful for his leadership and his refusal to accept any cash pay -- he still works for $1 annually -- that they gave him a plane.
A $90-million Gulfstream V is a pretty good perk. It became even better in 2002, when the Cupertino, Cal., company started reimbursing Jobs whenever he used his plane on company business. In 2002, Apple paid $1.1 million in flight-cost reimbursements for his use for the past two years.
Super Security
To say that Oracle's Larry Ellison is security-conscious is a bit of an understatement. He installed a security system at his expansive northern California home, and Oracle, based in Redwood Shores, Cal., pays about $1.4 million annually to monitor it. (To put this in perspective, Qwest pays about $3,000 annually to protect Mueller.)
Few details are available about Ellison's "residential security program," except that it includes "security personnel."
Box Seats 'Til Death
Nobody knew what fabulous perks Jack Welch got from GE. The 2000 proxy statement said he'd only received $54,019 in giveaways. In 2001, it was $171,772 -- mainly for financial counseling.
But during a bitter divorce, Welch's ex-wife detailed a multimillion-dollar litany of perks that GE provided -- both before and after Welch retired. Among them: fresh flowers and a wait-staff for his New York City apartment; floor-level seats for Knicks games; a sky box for Red Sox games; and VIP seating at the French Open. Experts say the resulting brouhaha is one of the reasons regulators revamped corporate-disclosure rules. Welch subsequently gave up the bulk of his perks .
All this must stop. Government must insure working families are not subjected to such greed on the backs of working people. This should be a call for REVOLUTION !!!
No comments:
Post a Comment