CEOs take leisure trips on corporate jets as stigma wanes

While US boards have curtailed company-paid perks like hunting lodges and golf club memberships, chief executive officer (CEO)s are cranking up personal use of corporate jets.

The boards defend the perk as a tool to guarantee security and reduce wear and tear on globe-trotting executives. The result: Non-business travel expenses rose for the third straight year in 2013, proxy filings show. Gone is the outrage at CEOs flying in high style that peaked during the recession.

"If your CEO is on vacation and you need him or her to come back quickly, you'd much rather have them be able to hop on a plane and fly back for a meeting as opposed for them waiting to catch the next commercial flight," said Aaron Boyd, director of governance research for Equilar Inc., a Redwood City, California-based company that compiles data on executive pay.

General Electric Co CEO Jeffrey Immelt racked up $343,121 in personal use of the corporate plane last year, and the tally for JPMorgan Chase & Co's Jamie Dimon doubled. Meanwhile billionaire Larry Ellison leased his own aircraft to the company he runs for $1.5 million.

Spending on jet travel rose 61 percent last year among the 10 biggest Standard & Poor's 500 Index firms that reported such data and 3.1 per cent for the top 50, according to proxy filings.

Companies such as Boeing Co and Halliburton Co mandate the use of corporate jets for leisure trips. And flying enthusiasts like Ellison, the 69-year-old founder of Oracle Corp, and Google Inc.'s Eric Schmidt are taking it to the next level by renting their own jets to the company.

Oracle paid Wing and a Prayer Inc, operator of Ellison's aircraft, a total of $4.3 million over three years. At Google,Schmidt was reimbursed $1.4 million as executives, including the CEO himself, flew on his private aircraft in 2013. Schmidt, a billionaire, doesn't profit from the deal, the company said.

Wynn Travels

Steve Wynn, the billionaire founder of Wynn Resorts Ltd., had one of the biggest bills for personal trips in 2013 -$927,829. This year, the 72-year-old CEO will have to reimburse for "certain expenses" of such trips on the corporate jet, according to the casino company's proxy filing. Wynn also lost a villa perk and was asked to pay an annual rent of $525,000 for the house he uses as personal residence at Wynn Las Vegas.

At the other end of the spectrum: Warren Buffett, 83, who reimburses Berkshire Hathaway Inc down to postage stamps and phone calls that are personal. The chairman and CEO uses company-owned aircraft exclusively for business purposes. For personal trips, Buffett flies like a regular manager and gives some money back to his Omaha, Nebraska-based company. He has fractional ownership at NetJets, a Berkshire Hathaway unit, and pays standard rates, the proxy filing shows.

Perk Comeback

Personal use of corporate jets is making a comeback after some corporations took the perk away five years ago following the financial crisis. The outrage peaked when auto chiefs including Ford Motor Co's Alan Mulally and Rick Wagoner, then at General Motors Co, flew on company jets to plead with Congress for bailout money.

The stock market gains of the past two years - the S&P 500 has jumped 34 per cent - helped diffuse criticism over some perks, paving the way for more travel on the corporate jet, said David Schmidt, a senior consultant at executive compensation firm James F Reda & Associates in New York.

"If the company is performing poorly, it's a red flag and people are going to be upset," Schmidt said. "If the company is performing wonderfully, who cares."

Increased Spending

Personal use of the corporate jet at Fortune 100 companies plummeted 35 percent to a median of $92,421 in 2010 from 2008. The average climbed back to $116,292 in 2012, according to Equilar, which hasn't yet compiled the data for last year.

Companies are required to report any use of $25,000 or more. For the 50 largest S&P 500 companies that reported data, the average rose to $284,682 in 2013 from $276,014 in 2012, according to data compiled by Bloomberg. For the 10 largest, the average jumped to $259,643 last year.

While Dimon's use doubled to $125,973, it's below average. The New York bank uses an independent source to calculate the amount of personal use attributed to Dimon that includes fuel, lubricants, landing fees, crew expanse and even catering, according to its proxy filing. Joseph Evangelisti, a JPMorgan spokesman, declined to comment.