Executive perks should be X-rated
Spotlight shines on obscene payouts, sexy office antics
Diane Francis, Financial Post
The investing public got a glimpse into the true extent of obscene executive payouts this week, thanks to proposed Securities and Exchange Commission disclosure requirements.
Citigroup voluntarily complied ahead of time (new disclosures don’t start until 2007) and published its chairman’s full remuneration. It showed, for the first time, the true cost of corporate jet travel by executives, a perk that is widely abused in Canada, too.
Citigroup chairman Sanford Weill was paid US$21.5-million. On top of that, the company’s shareholders paid his income taxes. His CEO made more, US$23-million, which represents a 16% raise. Last year, shareholders saw a 1% increase in the value of the company’s shares.
Mr. Weill’s use of company planes was calculated at US$524,000 for the year. The company also forked out a small fortune paying other personal bills for him. His medical and dental benefits totalled US$61,846 and personal financial planning advice cost US$85,714.
Mr. Weill is due to retire this year and the company disclosed that he has been given lifetime use of the company jets on top of US$1.1-million-a-year retirement benefits.
The commission hopes such enhanced disclosure rules will embarrass executives and enlighten shareholders into demanding lower payouts.
Didn’t seem to work in Citigroup’s case.
OTHER PERQS
It seems that some top dogs feel they are entitled to other "perquisites."
A rash of sexual harassment lawsuits has hit the financial world.
In 2004, Morgan Stanley paid US$54-million to settle a lawsuit brought by women complaining about breast-shaped cakes, lewd comments and strippers in the office.
Saleswoman Laura Zubulake last year won a US$29-million verdict against UBS AG, Europe’s biggest bank.
In January, six women sued Germany’s Dresdner Kleinwort Wasserstein for US$1.4-billion because they were cut out of strip parties where huge bonuses and promotions were doled out.
And last week, the latest lawsuit hit Societe Generale’s New York office. It was sued by a former employee, Kristin Polidori, who claims that her boss made lewd suggestions to her and bragged about his sexual exploits with colleagues.
"Societe Generale takes allegations of sexual harassment very seriously," read the bank’s statement.