The Big Reveal: SEC rules unmask CEO perksThe amount paid on perks appears to have gone up sharply in the past year, according to one report. But it may have been that high all along, it just wasn't disclosed.NEW YORK (CNNMoney.com) -- Thanks to new SEC rules, corporations are revealing more about CEO perks than they have in the past, according to a new report from The Corporate Library. Based on the annual proxy statements of 100 companies, the corporate watchdog group found that the average disclosed cost of perks and executive benefits for 2006 shot up drastically. The median cost of perks was 23 percent higher, at $112,894. The median is the midpoint - meaning half of the 100 companies reported higher costs. The reason for the big increases was under-reporting in the past. According to the report: "Poor disclosure in the past has significantly masked the levels of perquisite provisions and their associated costs." The perks and benefits enjoyed by CEOs and a handful of other top executives may include personal use of company aircraft and cars, security provisions, legal fees, financial planning services, country club memberships, housing and relocation costs (including a company buying and selling an executive's home if he or she must relocate). And if the perk is considered taxable income and triggers an IRS bill for the executive, the company will sometimes cover that too. "The issue is not that the perks cost a lot of money. As an absolute number it's pretty minor," said Paul Hodgson, the report's author. "From a shareholder's perspective, it's that [CEOs are] the most highly paid guys on the planet, so why can't they pay for [these things] themselves?" But the cost of those perks, while minor relative to an executive's pay or the company's bottom line, is easily double or more many people's annual compensation, Of the 100 company proxies the Corporate Library examined, for example, the greatest increase in disclosed perk costs came from Merck (Charts). In 2005, the pharmaceutical company reported that its CEO, Richard Clark, received a $9,450 company match in his savings plan. In 2006, the company disclosed that he received perks totaling $210,536, which included not only a company savings match but use of the company aircraft, commuting benefits, security alarm systems and dividend equivalents on unvested restricted stock. Some companies, such as Whole Foods (Charts), Corus Bankshares (Charts) or SYNNEX (Charts), meanwhile, reported no CEO perk compensation from last year, according to Hodgson's report. They either don't provide special perks for their executives or the perks they do pay for don't exceed $10,000 combined, which is the new reporting threshold required under the SEC's latest rules, down from the $50,000 threshold that used to be in effect. ---------------------------------------------------------- |
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