A Peek at Executives’ Sky-High Aircraft Perks
By Stephanie Forshee
August 10, 2018
Aircraft perquisites have taken a lot of heat lately, particularly from the SEC when executives’ travel perks aren’t properly disclosed.
Agenda, using data pulled by SEC filings analyzer MyLogIQ, took a closer look at what was disclosed in regulatory filings. As a group, S&P 500 executives spent a collective $39.5 million on air travel in 2017, up from $32.6 million among those executives the year prior.
There were more than 100 executives who spent more than $50,000 in aircraft perks, while almost 200 of the S&P 500 spent between $100,000 and $500,000, filings show.
More than 40% of S&P 500 companies disclosed that they used air travel perks, and of that group, it turns out that Facebook co-founder and CEO Mark Zuckerberg spent more than any other executive. In fact, the $1.5 million in aircraft perks accounted for 17% of his entire compensation plan last year. (His base salary is $1, so his entire compensation package last year fell into the “other compensation” category.)
Zuckerberg has already made headlines for his perquisites spending, as Agenda has reported. While his travel bill is the highest among other executives, it makes up only a portion of the $8.8 million Facebook spent on Zuckerberg’s security detail last year, which the company’s compensation and governance committees deemed necessary given his high profile and threats he receives as a direct result of his role with the company.
A spokesperson for Facebook confirmed that the numbers are accurate but did not comment further on Zuckerberg’s flight expenses.
The only S&P 500 exec to spend a greater percentage of his paycheck on flying the high skies than Zuckerberg was DISH Network CEO Charles Ergen. He spent 29% of his total compensation on aircraft perks, according to MyLogIQ’s findings. That amounted to nearly $720,000 of his $2.4 million salary. DISH did not respond for comment.
In the S&P 500, there are 43% of executives who say they took advantage of aircraft perks, according to the SEC data collected by MyLogIQ. On average, those executives spent around $93,000 on aircraft use, down from $106,000 the year prior.
The other 57% of companies didn’t list any use of aircraft for their management in 2017.
Among the Dow 30, 25 executives received aircraft perks.
As Jannice Koors, senior managing director and western region president at Pearl Meyer, explains, executives at the Fortune 200 companies are more likely to take advantage of aircraft perks than executives at mid-market-cap companies.
“The bigger the company, the more likely it is to have executives using the company’s aircraft,” Koors says, noting that citations of corporate jets for security purposes is more common at a Fortune 200 “where the person is well known and recognizable.”
Indeed, Zuckerberg isn’t alone on the security rationale. Aetna points out in regulatory filings that its CEO, Mark Bertolini (No. 9 on the list), received $457,000 in personal use of corporate aircraft, something the company requires for him “in the interest of security.”
Pearl Meyer’s Koors is betting that, overall, next year’s percentage of executives who disclose airplane perks will climb — largely due to two recent SEC enforcement actions that involved perquisite disclosures.
Ruth Wimer, partner at Winston & Strawn, says she is surprised that the usage among the S&P execs is as low as it is but that it might be a symptom of boards’ limiting their aircraft use to strictly business matters.
“Because of the negative publicity, it could be that companies permit less use,” she says. “Boards do find it to be a useful business tool, but they’re reluctant to allow the executive to travel personally because the public doesn’t like it.”
It’s getting trickier, though, to place personal use and business use in two separate categories.
As the SEC has shown, there’s not as much of a gray area anymore. For instance, the SEC said in its settlement with Dow that former CEO Andrew Liveris (No. 11 on this year’s list) should have disclosed trips to outside board meetings, among other things.
Wimer says she is telling clients to be cautious and disclose more. On the other hand, she thinks some of these executives should be cut some slack, even when investors see executives that spent more than $1 million on aircraft use.
For one reason, these executives at major companies are “always working” — whether on weekends or on family vacations, she explains.
Secondly, by being allowed to travel on the company’s dime, the execs can avoid the “lag time” on commercial flights.
Plus, Wimer asks, “Do you think it would be appropriate for Mark Zuckerberg and his wife to get on a commercial flight? [Personal aircraft] is to keep him safe. To the SEC, that’s a perk.”