CEOs Leasing Jets Back To Employers
It's a pretty sweet deal.
CEOs of some major corporations don't just get the corporate
jet. They also make hundreds of thousands of dollars by leasing the
jet back to their employers. That has some critics of overblown
executive paychecks up in arms.
"Private jets are seen as the trappings of the imperial CEO,"
said Brandon Rees, a research analyst with the AFL-CIO, in an
interview with Forbes Magazine. He wonders if it makes fiscal sense
for companies to first buy the CEO a jet, then pay him big money to
lease it back.
At the center of the controversy is the family that runs Tyson
Foods, the biggest meat producer in America. The government is
investigating its lease-back arrangements with the company, where
Tyson Foods paid family members $2 million to lease aircraft from
Tyson Family Aviation. That company is run by the food
manufacturer's CEO John Tyson and members of his family. The
company says its independent board had approved the
arrangement.
Not far behind Tyson is Seattle's Starbuck's. Last year, the
company spent about $1 million to lease aircraft from its chairman,
Howard Schultz.
August Busch III, heir to the Anheuser-Bush brewery, raked in
$688,000 by leasing his plane to the beer-maker. The brewery says
its internal conflict-of-interest board approved the deal and
regulatory documents show Busch leased the aircraft at cost.
How do companies justify this? In the case of M&T Bank of
Buffalo (NY), it comes down to -- you guessed it -- money. And
time. M&T chartered an aircraft from a company that's
50-percent owned by CEO Robert Wilmers.
"With the amount of travel he does
in our footprint, it's much more effective cost-wise and time-wise
to use his airplane sometimes," said company spokesman Michael
Zabel. "It's something he's had for quite some time and only
recently has been disclosed."
One executive compensation consultant said there's a security
angle to this story. "To a lot of boards their CEO is a pretty
valuable commodity," said Paula Todd, who works for Towers Perin,
"and they are, I think, well advised to do whatever they can to
make sure this person doesn't meet a terrible end."
But salary watchdog Reese, over at AFL-CIO, thinks that's
hogwash. "There are plenty of third-party corporate jet leasing
companies that are available for the company to use," he said.
"There's no justification for having to use the CEO's personal
aircraft to do that."