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Executive jet use, 'gross ups' alive, well


The following is from the May 22, 2011, edition of The Pittsburgh Post-Gazette. SMU Business Professor Mel Fugate, provided expertise for this story.

May 25, 2011

By Len Boselovic
Pittsburgh Post-Gazette

Two executive perquisites curbed in recent years are personal use of the corporate jet and tax gross ups, payments to executives to cover the income taxes levied on their benefits.

Using the corporate jet for private travel is a hot button issue for pay critics, according to Michael S. Sirkin, head of the executive compensation practice for Proskauer Rose, a New York law firm. Gross ups "are disappearing as fast as ice cubes on a hot July day," according to Bruce Ellig, a New York-based pay consultant.

But the perks remain a cost of doing business for shareholders of several companies represented on this year's Fortunate 50.

Of the more than 100 executives whose compensation was analyzed, the 10 biggest users of the corporate jet received free flights valued at $941,577 last year, 8 percent less than in 2009. The 10 executives who received the largest payments to cover taxes on their perks received $343,629 last year, up 14 percent from 2009. . .

Say-on-pay, the practice of giving shareholders a chance to vote a company's pay policy up or down at shareholder meetings, could put more pressure on companies to curb gross ups, said Mel Fugate, a professor at Southern Methodist University's Cox School of Business.

"The potential is there to ... address the gross up outrage," he said. "It's just a ridiculous practice."

Read the full story.

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