Scrutiny of Bankers’ Perks Will Grow, Too

Country club dues, gym memberships and personal assistants. Home security systems, chauffeur service and parking. And, of course, all those private jets to ensure the comfort and safety of the boss.

Matt Biddulph

Top executives at banks enjoy all sorts of shiny perquisites. Yet despite being propped up by taxpayer bailout money, many banks are not yet ready to give them up.

Like bonuses, these extravagances are likely to come under greater scrutiny. Indeed, in announcing a salary cap on Wednesday for some institutions receiving government financial aid, President Obama also called for greater corporate review of “excessive or luxury items” for executives.

It’s not just big banks like Citigroup that dole out these perks. Small and midsize banks lavish them on their executives, too, and often sweeten salaries and bonuses with fringe benefits.

Bank of the Ozarks in Arkansas, which received $75 million in taxpayer money, paid $43,400 in 2007 for a personal assistant to coordinate business and charitable events from the home of George Gleason, the bank’s chief executive. International Bancshares of Texas, which accepted $216 million of taxpayer money, picks up the bill for shuttling its chief, Dennis E. Nixon, and his family on a corporate jet.

The perks are widespread. Across the industry, banks and their boards have been spending handsomely on supplemental benefits to augment salaries and burnish their corporate image, according to an analysis prepared for The New York Times by the executive compensation firm Equilar. Pay experts, by contrast, say many technology and pharmaceutical companies have scaled back on perks over the last few years.

“The party may be over but there is still a lot of cleaning up to do,” said Paul Hodgson, a senior research analyst at the Corporate Library, a governance and shareholder advisory group. “Particularly in this climate, change is very seriously needed.”

Before the financial crisis drove banks to seek taxpayer aid, lofty earnings allowed many to justify lavish expenses for executives. Boards often found business reasons to pay for extras like club dues and chauffeur-driven cars, which faced less scrutiny than salary and bonus figures.

The Equilar analysis covers 2008 proxy statements, which reflect the 2007 fiscal year, for banks now relying on the Troubled Asset Relief Program. Of 200 of the largest publicly traded banks that have received taxpayer money, about 61 percent, or 121 banks, paid an average of $10,835 in country club dues for their chief executive in 2007.

Nearly three-quarters, or 147 banks, spent an average of $20,668 in car and parking expenses. Corporate jets, now one of the biggest targets of Washington’s ire, were financed by 36 banks, or 18 percent of those now receiving taxpayer funds. More often than not, the banks let their leaders use the corporate jet for personal travel, at an average cost of $102,216. And regardless of size, many banks said they were “required” for the safety of the chief executive.

Some banks began to scale back extras even before applying for the first portion of federal funds, which placed no restrictions on perks. Others, like the American International Group , Bank of America and Citigroup, are curbing expenses under pressure from the government.

But a number of others said they had yet to decide how much they would rein in benefit spending after receiving taxpayer money, or would wait to disclose any changes in 2009 proxy statements due in coming months.

“The banks don’t seem to have adjusted to the new paradigm they are operating under,” said Mark Borges, a compensation consultant. “They haven’t yet appreciated that when you take public funds, you now have a new class of shareholders that are going to be more vocal and impatient with the way you operate.”

Those exposed to the harsh glare of the spotlight are rushing to suppress the most egregious-looking frills. Bank of America, which has received $45 billion in government assistance, said Wednesday that it would sell three aircraft and a Merrill Lynch helicopter after Mr. Obama called on banks to use “basic common sense” on compensation.

But others, like Regions Financial of Alabama, which posted an unexpected $6.22 billion loss in the fourth quarter and accepted $3.9 billion of taxpayer money, spent more than $23,000 on air travel in 2007 for its chief executive, C. Dowd Ritter. Like many banks, Regions requires its top official to avoid commercial aircraft for safety reasons. “You have far greater control of your environment in a private aircraft setting,” said Tim Deighton, a spokesman. He declined to say ahead of the bank’s 2009 proxy if the policy would continue.

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Then there are the little perks that add up to big money.

In the case of Bank of the Ozarks, Mr. Gleason, the chief, has an assistant working out of his home to oversee business, charitable and social functions held there. Susan Blair, a bank executive, said the arrangement was appropriate and helped produce record results last year. While the stock rose 13 percent, the bank recently accepted $75 million of taxpayer money.

Another small lender, UCBH Holdings, which caters to the Chinese-American business community, paid more than $43,700 in 2007 for a car and driver for its chief, Thomas S. Wu. It also covered nearly $20,000 in travel expenses for his wife to accompany him on business, and more than $3,300 in fitness club fees. Steve DiMattia, a spokesman for UCBH, which received $299 million in taxpayer funds after a plunge in its shares, declined to say if the bank would modify its perquisite program.

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