In Depth
Executive perquisites, commonly known as perks, are non-cash benefits and services provided to executives beyond their standard compensation package. Common perks include personal use of corporate aircraft (often the largest single perk, valued at tens or hundreds of thousands of dollars annually), executive security and home security systems, personal financial and tax planning services, company cars, club memberships, relocation assistance, and executive health programs. SEC rules require companies to disclose any individual perk valued at more than $10,000 or any aggregate perks exceeding $25,000 for a named executive officer. Perks are reported in the "All Other Compensation" column of the Summary Compensation Table in the proxy statement. The valuation of perks, particularly personal aircraft use, has been a contentious governance issue. Companies must use either the incremental cost to the company or the aggregate incremental cost method to value personal aircraft use, and different methods can produce significantly different reported values. Some companies restrict personal aircraft use to security-related travel (particularly for CEOs who face credible security threats), while others allow broader personal use as a competitive benefit. Proxy advisory firms and institutional investors have become increasingly critical of excessive perquisites, particularly tax gross-ups on perks, which effectively make the company pay the executive's personal income taxes on these benefits. As a result, many S&P 500 companies have eliminated perk tax gross-ups in recent years, and overall perk levels have declined as boards respond to governance pressure.