Insurer United Fire Group , which pays up to $8,300 a year for the memberships of CEO Randy Ramlo and other executives, says it operates in a "relationship-driven business" and that clubs are a "facility for business entertainment and meetings."
Few companies, however, disclose any reason why they provide executives club memberships.
"In certain communities, business happens in that environment, and employers would say this is really a business expense," says Myrna Hellerman of Sibson Consulting, a compensation and business strategy firm. "The real question is, 'Does this pass the snicker test?' "
Country clubs are frequently part of a broader perk program that includes stipends for investment planning, medical costs, cars, use of the corporate jet and other goodies.
SandRidge Energy CEO Tom Ward's 2011 compensation package is valued at $21.8 million, plus $4.5 million from vested shares. SandRidge spent $6,260 for Ward's club fees, on top of nearly $750,000 for accounting support tied to his personal investments, $184,000 for use of corporate aircraft and $90,000 for personal security.
Casino operator Boyd Gaming paid $7,400 in club fees for Chairman William Boyd in 2011. That's on top of $2.9 million in compensation and $150,000 for use of corporate aircraft.
Dollar Thrifty Automotive Group CEO Scott Thompson got compensation worth $5.5 million and gained $3 million from vested shares in 2011. He's one of several Dollar execs to get club perks. The car rental giant says the cost for each is less than $25,000 a year but declined to elaborate.
Club memberships are also provided for former CEOs. Tyson Foods Chairman John Tyson, who stepped aside as CEO in 2006, gets unspecified club dues under a 10-year, $500,000 contract that requires "services not to exceed 20 hours a month." Last year, he received $3.3 million in total compensation, including a $1.6 million discretionary bonus and $450,000 worth of personal corporate aircraft use.
At a time of increasing criticism over exorbitant CEO pay and government-mandated disclosure requiring more corporate details over pay and perk plans, many companies are cutting back on clubbing.
AT&T, Allegheny Technologies , Chesapeake Energy and Dunkin' Donuts , among others, put an end to club memberships starting this year. So did fast-food operator Yum Brands , which also dumped other perks but provided salary bumps of $25,000. General Dynamics ended club memberships to execs at corporate headquarters in early 2011, but covered three years of club dues "to address any transition issue caused" by the move.
Yet others, such as Heidrick & Struggles, are adding club perks to new contracts. The executive recruiter picks up fees to the club of CEO Kevin Kelly's choosing.
Pay experts say such perks are often boondoggles, given handsome compensation packages.
"It's a status symbol, and the justification is that it's a business expense, so companies absorb the cost," says Compensation Resources Managing Director Paul Dorf. "Whether or not that's reality, … it's another way of rewarding executives."