Many chief executives take advantage of their rights to the company jet. Who wouldn’t want their very own airborne steed at the ready? But should shareholders be footing the bill?
Since 2008, this particular perk has been one of the most closely examined and widely criticized. The three most common reasons given by companies for personal use of the corporate jet are: executive security, board mandate, and, quite simply, convenience.
How many big corporate CEOs actually get access to the company jet? Pay research company Equilar recently found that of the 95 public Fortune 100 companies, 65 CEOs were either eligible for or received some form of jet perk. Equilar noted that two CEOs who did not have the perk were running airlines, where complimentary air travel is typically provided to all employees. The average annual cost of the perk, at least at the companies that disclosed the figures, was $141,187, which typically represented about two-fifths of total perk spending.
So, which CEOs make the most of their jet perks? The five most expensive CEOs to fly around were Brian Moynihan at Bank of America (BAC), James McNerney at Boeing (BA), Jeffrey Immelt at General Electric (GE), Robert Iger at Disney (DIS), and Ryan Lance at ConocoPhillips (COP).
Bank of America CEO Brian Moynihan’s jetting around cost the company $448,251 in 2013. Spokesperson Lawrence Grayson said that Moynihan reimburses the company for personal use of the aircraft. So, where did this almost half a million dollars come from? Grayson explained that the SEC has a broader view of personal usage than, say, the IRS. So, for example, if Moynihan flies to California on business and then the jet must return to the bank’s North Carolina headquarters to fly another executive on business elsewhere, that return flight cost is attributed to Moynihan. While Moynihan does use the corporate jet for personal travel, none of those costs is disclosed because he pays for them himself. The bank noted that it did not feel that there was a security need for this, but cited efficiency. Since it doesn’t cost the shareholders anything, they will probably agree with this justification.
Boeing’s James McNerney non-business corporate jet travel (on a Boeing 737 Business Jet, naturally) cost the company a total of $373,137 in 2013. A company spokesman, John Dern, confirmed that requiring the CEO to travel on the corporate jet for personal trips is a “longstanding policy that helps manage safety, security and productivity.” McNerney sits on the boards of IBM and Proctor & Gamble, and travel to board meetings represented almost $68,000 of the total cost.
The cost of flying General Electric CEO Jeffrey Immelt on personal travel was $343,121. GE’s proxy statement indicates that these “[a]mounts reflect the incremental cost to GE for personal use of company aircraft….” It also states that the “[a]ggregate incremental cost, if any, of travel by the executive’s family or other guests when accompanying the executive is also included.” GE doesn’t give a reason for the perk. The proxy simply states, “We provide our named executives with other benefits that we believe are reasonable, competitive and consistent with our overall executive compensation program.”
According to a spokesperson from GE, Immelt does have the option to reimburse the company for personal travel. And in some cases, Immelt has reimbursed the company for such flights, though the company does not disclose this in its proxy statement or in any other filing.
Disney CEO Robert Iger’s corporate jet use cost $332,808 in 2013. In 2014, it cost $391,411. The company claims in its proxy statement that Iger’s “security requires the CEO to use corporate aircraft for all personal travel.” Disney clearly takes Iger’s safety very seriously. They spend over $600,000 a year on it, in fact.
ConocoPhillips CEO Ryan Lance’s jet perk cost $330,869. After Lance was made CEO in mid-2012, the board required him to use corporate aircraft for personal travel for security reasons “unless the Manager of Global Security determines that other arrangements represent an acceptable risk.” Like Immelt, amounts also include travel costs “for any family member or guest” accompanying the CEO.
True, personal use of the corporate jet doesn’t mean that the CEO is flying to one vacation home after another. But it’s safe to say that a CEO should seriously consider taking a page out of Moynihan’s playbook and reimburse the company for those kinds of trips.
Editor’s note: Fortune has updated this story based on comments received from General Electric after publication clarifying the company’s practices related to Jeffrey Immelt’s personal use of the firm’s jets.
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