The value of perquisites provided to CFOs seems to have reached a point of equilibrium, at least for now.
According to research from Compensation Advisory Partners (CAP), the median value of CFO perks among Fortune 500 companies held steady at $24,900 in 2014. Back in 2012 that figure fell sharply to $21,400, compared with $36,200 the year before, then inched up to the $24,900 mark in 2013. CAP’s latest annual study on the topic looked at compensation data reported in 2015 proxy statements by a sample of 100 companies.
The flattening trend occurred despite the fact that last year the percentage of finance chiefs who received perks hopped to 81% from 76%.
Also attesting to a more stable perquisite picture is that only one of the 100 companies studied (PNC Bank) reported in its proxy a change in perk programs for CFOs, CEOs, or both. By comparison, in 2011 16% of companies either eliminated perks, got rid of tax-gross-ups on them, or reduced their value. That proportion has been falling since, to 9%, 7%, and 1% from 2012 through 2014.
“While compensation committees continue to monitor the appropriateness (and competitiveness) of perquisite programs, as well as dollar values and overall executive usage, the degree to which executive perquisites are provided appears to have leveled off,” CAP said in its report on the study.
“We expect that companies will continue to closely align executive compensation with shareholder interests by limiting non-performance-based compensation, such as perquisites,” the report said. “Any potential perceived misuse of executive perquisites will continue to raise the ire of shareholders and proxy advisory firms and provide for headline news.”
That said, CEOs made out pretty well on the perks front in 2014. In a reverse of the CFO results, while the proportion of CEOs who received perks held steady at 83%, their perks’ median value climbed to $143,000. That was a 15% gain from $124,500 in 2013 and about six times the value of the freebies that finance chiefs got — a notable disparity, given that CEOs’ other compensation is typically only two-and-a-half to three times that of their CFOs, numerous studies have shown.
The most common perks were personal use of aircraft, automobile allowance, personal security, and financial planning.
The median revenue size and market capitalization of the studied companies were $34 billion and $56 billion, respectively.