Shareholders also might be surprised at the advice they are buying.
"Frequently these financial planners tell the executive to sell their stock," said Ira T. Kay, an executive pay consultant in New York.
Outrageous retirement benefits have been on the wane since former General Electric Chairman Jack Welch revealed a package that included free use of a Manhattan apartment, wine and flowers. But some executives seem prepared to weather any criticism in defense of their golden years. Gemunder, for example, gets special pension benefits to make up the difference between the standard company retirement plan and what an executive of his stature is entitled to. Estimated current value of the secondary plan: $87.3 million. He declined comment.
Timothy P. Horne retired as chief executive of Watts Water Technologies in North Andover, Mass. in 2002 but took home $495,564 in "consulting fees" under a contract that entitles him to 300 hours of such lucrative work a year "so long as he is physically able." Should shareholders tire of this and sell the company to someone with a different idea of the value of a retired chief's wisdom, Horne gets a lump-sum payment equivalent to $23,650 a month for life.
Many companies are cutting back on personal corporate jet use or requiring executives to pay more of their share. American Express, for example, will charge Chief Executive Kenneth Chenault for joy rides in excess of $200,000 starting this year. They're also cutting back on "gross-ups," or payments to cover taxes due on the free stuff they provide executives.
But it took Michael S. Jeffries, chief executive of Abercrombie & Fitch, to see the profit opportunity in giving up an outlandish perk. He negotiated a $4 million payment this year for agreeing to a $200,0000-a-year cap on his previously unlimited corporate jet use. "We think that the decision was in the company's best interest," a company spokesman said.
Company-paid housing is another perk on the wane, but don't tell that to Martha Stewart or Steven Wynn, two business titans making a defiant stand against the new austerity (neither responded to a request for comment). Martha Stewart Living Omnimedia pays the style queen's MS Real Estate Management Company $2 million a year under something called an Intangible Asset Agreement, wherein the company pays to "maintain, landscape and garden" her properties "in a manner consistent with past practices." Stewart also got $178,352 for security services and $49,440 for a weekend driver. And her daughter, Alexis, is on the payroll as sometime hostess for $300,000 a year.
The king of perks has got to be Wynn, however, who lives a predisclosure life of Las Vegas luxury as chairman of Wynn Resorts. Wynn, worth $1.6 billion, was paid $7 million in salary and bonus last year, plus additional compensation including $1.2 million in personal aircraft usage, $12,800 for a personal driver and $62,240 for "merchandise discounts." Wynn Resorts also provides his ex-wife, Elaine, a "villa suite" for which she pays $350,000 a year, down from $520,000 because of the declining Vegas real estate market. And the newly single Wynn himself negotiated the use of two "fairway villas" that the company figures are worth $503,831 a year, proof the real estate meltdown hasn't been a bust for everyone in America.
Image: Michael Saylor
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