The personal finance magazine Kiplinger’s– which usually contains stories like “Ten Hilarious Tax Deductions” and “How To Get A Bond Fund Out Of Her Clothes” goes off the path to offer “8 Outrageous Executive Perks.”
It’s a traffic getter, I’ll admit– and when it gets featured on the front page of Yahoo it affords 2135 people the opportunity to leave written evidence that they’ve completely missed the point. Go America.
Don Tyson retired in 2001, but Tyson Foods was so grateful for his past leadership that it financed vacations for Tyson and his close friends, paid their personal credit-card bills, and allowed him to charge unusual purchases — such as an $8,000 horse and a $20,000 oriental rug — to the company.
But perhaps the most objectionable perk was having Tyson company employees clean Mr. Tyson’s house and mow his lawn. According to a 2005 SEC settlement, Tyson Foods spent $203,675 having employees clean five different homes… [and] $84,000 in lawn-maintenance costs…
or, even more outrageous:
[Qwest CEO Edward Mueller’s] employment agreement gave his wife and daughter the right to use the company jet to commute to and from California, where his daughter was still in high school. The phone company expensed $281,182 that year for Mueller family joy rides on the jet…
The CNBC angle is to say something like, “well, good CEO’s are hard to come by and you have to compensate them well or else they’ll go somewhere else,” which sounds plausible but is Don Tyson likely to go somewhere other than Tyson Foods?
In truth, the perks are economically irrelevant. Mueller made $11M that year. Mueller’s daughter could have eaten the plane and the accountants would not have noticed.
But the perks are easier for us to value than the money, which is why the media focuses on them. I have no idea if $11M is a reasonable for a middle aged man with two chins, but I am sure that letting his daughter ride planes is unreasonable. Even though it isn’t.
What Americans object to is the overlap between personal and professional life. It all smacks of feudalism. We barely tolerate “the company car,” we certainly don’t like the idea that individuals can access the benefits and protection of their lord anytime they want simply because they’ve offered him their allegiance.
But there’s another question: why would the CEOs want these perks? Why not just ask for an extra $1M and buy your own plane or two sets of wives and daughters?
That’s why: because they didn’t. They don’t see the plane as a huge expense relative to their compensation, so why not? And they’re certainly blind to how it appears to other people– “wouldn’t people be angrier if I just got $12M, which is more money?” No. See above.
We might speculate that these perks stroke their ego, make them feel important– but again, they could buy those things themselves. Another piece not to be overlooked is the management of these perks: it’s a lot easier for the company to run a plane for you than for you to run it yourself.
But the biggest reason is that the CEOs don’t see a separation between the job and themselves, their job is their life, that’s who they are, and when who they are needs to get their daughter to high school, who they are is giving her the plane. That enmeshment is the source of much of the antagonism between “rich” and “poor.” “I made the money.” “The job made you rich.”
I will point out that the public’s focus on the perks over their nominal cost makes me suspect that we’ve lost our connection to the value of money; we have a better sense of the value of things. In as far as money represents an agreement of value, then I take this as evidence that the value of money is declining, i.e. that inflation is already here. I know the Fed doesn’t agree, but 2135 think otherwise.