For many executives at New York companies, the dollar value of perks is just a rounding error to their total pay package.
But the dollar value of some of these can add up to three or four times the salary of their firm's average worker.
For example, chairman William Harrison Jr. got $313,613 worth of free personal travel on JPMorgan Chase & Co.'s corporate jet. On top of that, the company gave him another $40,000 because he was taxed on that use of the jet.
In reality, the dollar value of the use of the jet is worth even more - costing as much as $10,000 an hour - but the IRS only taxes on a lesser amount, said Steve Root, managing director of Pearl Meyer & Partners, a Manhattan-based compensation-consulting firm.
"It's a tremendously favorable way for the executive to be able to get use of a perk that's limited to the rich and famous at relatively low tax cost to them."
Like many other large companies, JPMorgan Chase says it requires its top officers to use the corporate jet for personal travel for "security reasons" (despite the fact that many executives regularly took advantage of the personal use of jets long before Sept. 11, 2001).
Although it's illegal now, some companies are also continuing to forgive loans to executives that were given out before a 2002 law took effect. "It's just a crazy way of using stockholder's money," said Paul Hodgson, senior research associate at The Corporate Library, an independent investment research firm.
Last year, Manhattan-based SL Green Realty Corp. forgave a $124,000 loan to its chief executive, Marc Holliday.
Although these amounts are small compared to the millions in bonuses, stock and other benefits executives earn, perks are coming under more scrutiny.
For example, lavish perks given to former General Electric Co. CEO Jack Welch touched off an uproar over the practice.
The extent of his perks only became public during divorce proceedings when it was learned that GE paid for extravagant meals at Jean Georges, footed the bill for satellite TV at his four homes and gave him exclusive use of an $11 million apartment in New York City.
Last year, federal regulators found that GE violated the law by failing to fully disclose the lavish perks, but it did not fine the firm. Welch has agreed to pay GE $2 million to $2.5 million a year for the perks.
Generally speaking, perks that cost less than $50,000, or 10 percent of an executive's salary and bonus, don't have to be disclosed. However, investors and regulators saw the Welch case as a symbol of the greedy CEO.
Now, regulators are considering making new rules requiring better explanations of perks, but several companies are preemptively explaining themselves.
"You hope you're going to get some good PR by doing it in advance of being told to do it," said Jan Koors, managing director at Pearl Meyer & Partners.
Staff writer Richard J. Dalton Jr. contributed to this story.
Perks add up, but the feds are watching
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