Trials reveal CEO compensation
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| Sun, 02-22-2004 - 10:13am |
By ALEX BERENSON
Published: February 22, 2004
aircuts. Shower curtains. Parking reimbursements. Country club memberships. Use of corporate jets.
Recent criminal and civil court cases involving top executives have brought to the fore an open secret in corporate America: for executives with multimillion-dollar salaries, no company-paid perk is too small — or too big — to accept.
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The details of the personal expenses that executives put on the company tab often are not known because loopholes in federal disclosure rules let publicly traded companies generally avoid disclosing the perks they give executives along with pay and stock options. But the recent trials of Martha Stewart and other executives have revealed the lavish benefits some receive.
During the criminal trial of Ms. Stewart, James Follo, the chief financial officer of Martha Stewart Living Omnimedia, testified that Ms. Stewart had asked the company to reimburse her $17,000 annually for her weekend driver as well as for trips to her hairdresser, coffee and other items.
The trial of L. Dennis Kozlowski and Mark H. Swartz, two former top executives at Tyco International, a manufacturing conglomerate, has revealed that Tyco paid an array of their expenses. The bills included tuition to private schools for Mr. Swartz's three children and $1 million for a birthday party in Sardinia for Mr. Kozlowski's wife. And then there was the infamous $6,000 shower curtain and a $15,000 umbrella stand.
Such extravagances draw criticism from an unlikely combination of corporate watchdog groups and management consultants who create executive pay packages. By avoiding expenses lower-level employees must pay, executives will only worsen the cynicism that ordinary Americans and professional investors have about them, the critics say.
"It just reflects a disconnect from the way that average people live," said Diane Doubleday, a principal at Mercer Human Resource Consulting.
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The average chief executive at a big public company now makes well over $10 million a year, including stock options, almost 20 times the level in 1981 and 500 times the average worker's salary. In that context, perks are a relatively small part of executive compensation, said Joe Bachelder, a lawyer for many chief executives. And companies typically give midlevel executives some extras as well, including reimbursement of their cellphone bills, expense accounts for meals and occasionally company cars. "The real question is perception," Mr. Bachelder said. "It's a question of where you draw the line."
Full text at http://www.nytimes.com/2004/02/22/business/22PERK.html?hp

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>"L. Dennis Kozlowski and Mark H. Swartz two former top executives at Tyco International"<
I saw the video of LDK's wife's b'day extravagancer. Wait-persons dressed in Roman attire. Many families live four years, or more,
What I don't understand is why people aren't interested. Corporations use loop holes to rob the Treasury of billions (recent "Tax Me If You Can" program on PBS). Corporations pass health-care cost on to employees and use the money saved to provide executives, which are paid billions, with ridiculous perks. Nadar has a point, and maybe it needs to be discussed--as much as I hate to see him toss his hat in the ring.
>"Nadar has a point, and maybe it needs to be discussed--as much as I hate to see him toss his hat in the ring."<
I wish he'd run as a Dem.. I greatly admire him. He's done more for the good of the public than a dozen politicians.
Did you watch Meet the Press? If not the text is in the Nadar post in the Election 2004 folder.
Neither side truly wins, and the average American is the one who ends up losing in the end.
Remember it was corporations that brought about the need for unions. There was a time when unions were very strong--no more. We are back to corps exploiting the people!
this goes on at all levels. How many of you know of managers that have dinners with friends expensed because they also happen to do business with them (or not). How come the department head with a salary over $70,000 gets a company car (and gas and insurance paid for) even if he does not travel for business at all?
It goes on alllllll the time....in varying degrees.
I had to laugh when Mercedes Benz took over (sorry the PR word was MERGED)Chrysler and basically fired all of the top people because the salary for the CEO of Chrysler was more than what the whole German Board of Directors made combined....not to mention the perks.
There were stories left and right how these German moneypinchers came in and took things away. All I kept thinking was "Do you want your perks or do you want to lay off people" unfortunaltely for some of these managers I was not so sure about that answer.
The gap between the little employee and the top management is too big and neither can relate to one another. That can not be good for the corporate culture, say nothing of labour relations, union etc. It polarizes things so much.
Got to go....my manager has to go for her manicure (during business hours and with the company credit card)......but hey she needs perfect hands when she meets clients...right???????
Tongue in cheek....Ingrid
Good to meet you
I have had to schedule emrgencie!!!!!! nail appointments in the past.
Good grief.
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