Perks for tech CEOs shrink, but some retain corporate jets

Excessive perks are on the way out, compensation specialist says

Executive perks are a lightning rod for shareholder criticism, and many tech companies are cutting back on CEO extras to avoid a negative outcry. But some perks -- like personal use of corporate jets -- are proving hard for executives to relinquish.

One company that has slashed its executive extras is AT&T. CEO Randall Stephenson saw the value of his perks cut 52% from $864,632 in 2009 to $417,410 last year. The biggest hit was to club memberships. AT&T paid $215,954 for Stephenson's club memberships in 2009 and just $15,174 in 2010.

The trend is irreversible, predicts Nora McCord, managing director at Steven Hall & Partners, an executive compensation consulting firm based in New York

"The company car is going away quickly. Club memberships are gone, by and large. Preferential earnings on retirement accounts are fading. Executive physicals have stayed but are starting to go," she says. "Five years from now, I think we'll be in an environment where those types of perks don't exist."

High fliers

While the trend is to cut back on CEO perks, some extras are sticking around. In particular, using the company jet for personal travel is a pricey perk that many tech CEOs treasure. "It's the one perk executives are the least willing to give up," McCord says.

One frequent flier is IBM CEO Sam Palmisano, who received $311,288 for personal use of company-owned aircraft in 2010.

The CEOs of newly split Motorola are also among the heavy users of company jets. Sanjay Jha, CEO of Motorola Mobility, netted $186,189 for personal use of company aircraft. Greg Brown, who runs Motorola Solutions, received $133,530 for the same perk.

Other CEOs accustomed to using company jets for personal travel include former HP CEO Mark Hurd (to the tune of $158,816); EMC CEO Joe Tucci ($134,684); former CA CEO John Swainson ($106,589); AT&T's Stephenson ($77,182); CA CEO Bill McCracken ($25,427); and interim HP CEO Cathie Lesjak ($20,249).

Another perk that's nonnegotiable for some companies is personal and residential security for the CEO. Proponents view it as a legitimate business expense, since safeguarding the CEO is effectively a benefit to the business that not only minimizes corporate risk but also is aligned with the interest of shareholders.

Last year Oracle paid $1.5 million for security-related costs and expenses for CEO Larry Ellison's residence. Likewise, HP paid $362,899 for home security for ex-CEO Hurd, IBM spent $55,465 for Palmisano's home security, and AT&T spent $30,504 for Stephenson's.

Bucking the trend is Dell, which used to pick up the tab for Michael Dell's personal and residential security -- to the tune of $1 million in 2008 and $1.2 million in 2009. But not anymore.

"Effective for fiscal 2010, Dell will only provide Mr. Dell with business related security protection," the company stated in its proxy statement. The only perks Dell received in 2010 add up to $13,623 and are linked to his retirement and benefit plans. (See which other tech CEOs go to work perk-free.)

Whether other tech companies continue to slash CEO perks remains to be seen. In the meantime, here are some juicy executive perks worth highlighting.

Car and driver: Auto benefits may be diminishing in popularity, but they're not extinct. Motorola Mobility's Jha received $50,633 for personal use of a car and driver, and his counterpart at Motorola Solutions (Brown) received $16,748 for the same perk. AT&T's Stephenson received $28,991 for auto benefits.

Perks on top of perks: Another frequent source of ire for shareholders is tax gross-ups, which are tax payments related to a given perk. For instance, after former CA CEO Swainson logged $106,589 worth of personal aircraft use, he collected a $36,619 reimbursement to cover the personal tax he paid on gains related to his aircraft perk.

Other tech CEOs who received tax reimbursements on personal benefits include Motorola Mobility's Jha ($55,159); former HP chief Hurd ($36,619); Motorola Solutions' Brown ($26,849); IBM's Palmisano ($14,031); and HP's Lesjak ($9,026).

Financial aid: Symantec CEO Enrique Salem didn't receive a lot of perks in 2010, but he did net $10,000 as a reimbursement for tax services. Other tech CEOs who benefited from expert financial and legal advice include: Motorola Mobility's Jha ($25,348 for legal fees); HP's Lesjak ($18,000 for financial counseling); EMC's Tucci ($15,000 for financial planning); AT&T's Stephenson ($14,000 for financial counseling, including tax preparation and estate planning); and former HP chief Hurd ($13,500 for financial counseling).

CEO housing: Motorola Mobility paid Jha $61,243 for temporary housing, and CA picked up the $23,505 tab for company-provided housing for former CEO Swainson.

Political protection: Oracle hired a law firm to make sure its most senior executives don't run afoul of laws related to the reporting of their personal political campaign contributions. CEO Ellison tapped that service for $4,642.

All work and no play: Apple COO Timothy Cook stepped in as CEO during Steve Jobs' medical leave of absence in fiscal 2010 -- a move that seemingly left him little time to vacation. Among the compensation extras he received is a payment of $40,001 to cash out accrued and unused vacation.

Going away gifts: Nothing says goodbye like a generous severance. Hurd, who's now at Oracle, departed HP with a $12.2 million severance payment. Swainson parted CA with a $4.5 million severance payment upon his retirement, and Extreme Networks' former CEO Mark Canepa collected $426,494 in severance pay after resigning in October 2009.

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