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October 25, 2013 at 05:00 AM
The provisioning of a company-paid aircraft, car or home security system are not normally features of rank-and-file employee benefits. But for the CEOs of America’s largest corporations, among them the nation’s brand-name life insurers, these perquisites are par for the course.
See also: CEO compensation: The sky is the limit
That’s certainly the case for the CEOs of a peer group of life insurers — Ameriprise Financial, Hartford Financial, Lincoln National, Principal Financial and Prudential Financial — whose actual compensation and performance metrics are compared here. Among the various fringe benefits NU examined, use of a company vehicle, either for business or personal reasons, is the most common among the five.
A review of proxy analyses statements from Institutional Shareholder Services shows that Lincoln National CEO Dennis Glass received $51,320 for personal aircraft use. Prudential Financial CEO John Strangfeld enjoyed nearly half that amount ($24,320) for a company car, and a bit more for a personal home/security system ($26,371).
Ameriprise Financial CEO James Cracchiolo surpassed his colleagues in the transportation category: The insurer doled out $166,466 for his personal aircraft use. To boot, he received an additional $89,455 in perks (undisclosed), and an “allowance” of $35,000.
In total, the five CEOs enjoyed $413,656 in perquisites. The one outlier within the group is Hartford Financial CEO Liam McGee, who received no perks.
As large as these fringe benefits may seem to workers outside of America’s C-suites, consultants who advise companies on executive compensation says the trend in recent years has been to reduce executive perks. One reason: A growing number of boards and compensation committees are linking pay to company performance, a trend fueled in part by pressure from institutional investors and proxy advisory firms.
“The number, type and value of the perks have come down dramatically over time,” says Marc Baransky, managing director of Semler Brossy Consulting Group. “Large public firms want to manage pay in terms of components that are performance-based, are clearly disclosed and are consistent across companies.”
Sibson Consulting Senior Vice President Myrna Hellerman agrees, adding that perquisites can also focus unwanted media attention on their chiefs.
“The view of many boards now is, ‘We’re already paying the CEO a lot of money. Giving him an additional $20,000 as part of a multi-million compensation package is silly. If you’re a big publicly traded company, you don’t need the negative publicity.”
Among the first perks to be axed, say experts, were tax gross-ups: money to pay income tax on the perks. Indeed, not one of the CEOs in Prudential Financial’s peer group received this benefit.
