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Many employees have won the company to buy comfortable office chairs and computer stands in a time of cozy atmosphere during Covid-19 work. The CEO of the S&P 500 company has been much better when it comes to improving working conditions. Among the luxury benefits of C-Suites is the strengthening of private jet privileges and paid mansions, which have long lasted longer than the pandemic.
Proxy Advisor Glass Lewis recently looked into executive payfiling over the past few years. Between 2019 and 2023, the value of the boss’ annual parka increased by more than 30%. The absolute fee is usually hundreds of thousands of dollars, but for some bosses like Salesforce’s Marc Benioff and Palo Alto Networks’ Nikesh Arora, it can reach millions.
An easy way to reward executives is to use checks, bonuses and stock options. Instead, businesses are becoming concierges offering travel, housing, security and even leisure. This is the biggest perk that Mark Zuckerberg will receive from Meta in 2023, with jumping and boundaries, for personal and family safety over $20 million. Zuckerberg currently owns $223 billion worth of Facebook stock, which could possibly be perplexed by his Rent-a-Cops.
Watchdogs such as the Securities and Exchange Commission focus primarily on disclosure rather than forms or amounts. In one enforcement action, CEO Argo Group Mark Watson was unable to report that he was using company money to pay tickets for a Posh Met Gala in New York City.
However, shareholders should wonder whether this shadow compensation is justified. So why can’t rich CEOs pay from a multi-million-dollar wage package for these merchandise that no one else in the company can get?
Partly, the answer is because the American board and shareholders believe that on the surface the talent of elite managers is worth the king’s ransom. Troubled Starbucks hired Brian Nicole as CEO of Chipotle in 2024. He received private jet allowances for work and private trips in California, far from Starbucks’ Seattle Base. This is in addition to the $90 million sign-on awards and $28 million annual compensation target.
The risk is that these seemingly minor costs are absolutely creeping up. Shareholders may not notice because they are smaller than the other costs of the company. But at the worst, they set poor examples for more ordinary employees and subsidize inefficient behavior by bosses, such as living far from headquarters. Gradually, as conditions normalize, home workers are pushed back into the office. Don’t expect CEOs to easily pull back the profits of the pandemic.
sujeet.indap@ft.com
