Glass Lewis Flags Executive Perks
Certain perks may be “an indicator of underlying broader problematic pay practices and should be examined with scrutiny,” according to Glass Lewis’s “The Resurgence of Executive Perquisites.” The proxy advisor noted aircraft, housing and security are driving the increase in perk spend and cited large companies whose shareholders have taken issue with them.
By the numbers: Total CEO perks saw a big rise during the pandemic - 41% to nearly $137 million from 2019 to 2023.
Aircraft Costs Soar: In particular, CEO air travel climbed nearly 46% in 2023 versus 2019 and the number of companies offering this perk jumped 28%.
SEC scrutiny: Companies have been fined for under-reporting aircraft perks, making transparency and proper classification critical compliance issues.
Commuting CEOs: Executives flying from home to HQ may contribute to excessive usage of this perk – a situation that some shareholders have criticized, not only due to costs but the practice being incongruent with return-to-work policies for the broader workforce.
Housing and Relocation: While costs have ebbed and flowed with Covid, total relocation expenses increased 41% from 2019.
An important nuance: Some companies are opting out of formal relocation packages up front, but spend more on back-and-forth jet travel.
Companies need to weigh long-term strategy over short-term flexibility.
Personal Security – Necessary or Excessive? The most dramatic rise came in personal security costs, which more than doubled from $45 million in 2019 to over $98 million in 2023.
While many boards argue this is an essential business expense, the SEC classifies out of office security as a perk. The Center will advocate for reclassification at the upcoming June 26th SEC roundtable.
The Bottom Line: Glass Lewis warns excessive perks may “raise eyebrows” with investors (see our 2023 survey on executive perks and business travel) and notes that they serve as a “harbinger” for bad practices, sometimes leading to a low Say on Pay vote.
Megan Wolf
Director, Practice, HR Policy Association and Center On Executive Compensation
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