Many companies allow their chief executives to use the corporate jet for personal travel, according to a new study released Tuesday based on pay disclosures in new corporate proxy statements.
The study by the Corporate Library, a governance research group, looked at a sample of 215 CEOs whose companies reported perk packages of more than $500,000 in annual proxy statements filed between March and July. It found that 54 percent of the CEOs had access to corporate aircraft last year for nonbusiness use.
Revised disclosure rules have forced corporate America to provide investors with more details about top executives' pay and perks, including personal flights on the company plane.
Some companies, citing security concerns, want their executives to take the company plane whenever they fly. But the Corporate Library says that shareholders should not have to pay for an executive's personal trips.
"Use of the corporate aircraft, indeed any corporate transportation, for personal and leisure uses is, of necessity, a benefit to the executive," said study author Paul Hodgson, a senior research associate at the Corporate Library in Portland, Maine.
He said that while "a few companies require some level of reimbursement from executives for this benefit, most do not."
Costs of the perk vary widely, with a median annual cost to companies of $182,929, the study found.
The company that racked up the biggest costs for the perk last year was Atlanta-based financial services company CompuCredit, which recognized costs of $1,004,900 for personal air travel for CEO David Hanna.
Hanna, a CompuCredit co-founder who owns a large stake in the company, receives a $50,000 base salary. In light of his "nominal" salary and no other regular compensation, he and his family are granted access to charter jet service for personal purposes, according to the company's proxy filing.
The study said that i2 Technologies recognized $942,565 in costs last year, the next highest amount, for jet use by Michael McGrath, who stepped down as CEO in July. It was followed by EchoStar Communications, which recognized $821,771 in costs for plane usage by CEO Charles Ergen.
Representatives from CompuCredit, i2 and EchoStar were not immediately available for comment.
The study also found that 21 of the CEOs in the study were reimbursed by their companies to offset the tax consequences of personal flights, which tax authorities consider income.
The biggest tax beneficiary was Meg Whitman, the CEO of eBay, who got $230,992 in tax reimbursement after generating $773,467 in aircraft costs, the study found.
An eBay representative was not immediately available.