Comments on: Life on Air Dell… http://www.footnoted.com/perk-city/life-on-air-dell/ Morningstar's guide to what's hiding in SEC filings Fri, 10 Feb 2012 20:24:57 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Who is "Doug"? http://www.footnoted.com/perk-city/life-on-air-dell/comment-page-1/#comment-8689 Who is "Doug"? Sun, 07 Jun 2009 01:59:51 +0000 http://www.footnoted.com/?p=3782#comment-8689 $4 million does look bad, but my point is that it's not really fair to compare company expenditures for business-related travel (which are typically viewed as legitimate) to company expenditures for personal travel (which I do in fact have a problem with). If the $4 million had been for personal travel, the directors should be hanged. But, in this case, it wasn't, so let's not call it personal travel or try to compare it to the personal travel costs of other CEOs. However, what I think we can question is the wisdom of using Michael Dell's personal plane as part of the company's fleet. That's a business decision, but seems like a questionable one to me. And, I don't have anything to comapare it to, but $4 million does seem like a high amount to spend on travel for one employee. Was that really the most efficient way to handle that person's travel? It would be interesting to compare it to what other companies spend on business-related travel, but that kind of gets into micromanaging after a certain point. $4 million does look bad, but my point is that it’s not really fair to compare company expenditures for business-related travel (which are typically viewed as legitimate) to company expenditures for personal travel (which I do in fact have a problem with). If the $4 million had been for personal travel, the directors should be hanged. But, in this case, it wasn’t, so let’s not call it personal travel or try to compare it to the personal travel costs of other CEOs. However, what I think we can question is the wisdom of using Michael Dell’s personal plane as part of the company’s fleet. That’s a business decision, but seems like a questionable one to me. And, I don’t have anything to comapare it to, but $4 million does seem like a high amount to spend on travel for one employee. Was that really the most efficient way to handle that person’s travel? It would be interesting to compare it to what other companies spend on business-related travel, but that kind of gets into micromanaging after a certain point.

]]> By: Riskworks http://www.footnoted.com/perk-city/life-on-air-dell/comment-page-1/#comment-8674 Riskworks Fri, 05 Jun 2009 13:30:52 +0000 http://www.footnoted.com/?p=3782#comment-8674 At an average of say $30k per trip, that works out to about 133 trips per year, and about 11 trips per month. and if the average trip cost for air travel is half of that, at an economical $15 per trip that is about 22 trips per month or about 266 trips per year. That does seem like a lot. Mr. Dell must be a living out of a suitcase. At an average of say $30k per trip, that works out to about 133 trips per year, and about 11 trips per month. and if the average trip cost for air travel is half of that, at an economical $15 per trip that is about 22 trips per month or about 266 trips per year. That does seem like a lot. Mr. Dell must be a living out of a suitcase.

]]> By: Michelle Leder http://www.footnoted.com/perk-city/life-on-air-dell/comment-page-1/#comment-8665 Michelle Leder Thu, 04 Jun 2009 02:55:49 +0000 http://www.footnoted.com/?p=3782#comment-8665 Hmmm......My understanding of the rules, and one of the things I've seen over and over in the proxies is the language that the reimbursement is the maximum mandated by the FAA, which I believe is the equivalent of a first-class ticket. I've also checked in with my go-to source on all things corporate jet related and he tells me that there's countless ways to slice and dice this number. I do agree that Dell (the company) is being more forthcoming here by reporting this number if that $4 million is all business-related, since they could have easily buried in SG&A. But that doesn't make it look any better. Hmmm……My understanding of the rules, and one of the things I’ve seen over and over in the proxies is the language that the reimbursement is the maximum mandated by the FAA, which I believe is the equivalent of a first-class ticket. I’ve also checked in with my go-to source on all things corporate jet related and he tells me that there’s countless ways to slice and dice this number.

I do agree that Dell (the company) is being more forthcoming here by reporting this number if that $4 million is all business-related, since they could have easily buried in SG&A. But that doesn’t make it look any better.

]]> By: Don't mix business with personal use... http://www.footnoted.com/perk-city/life-on-air-dell/comment-page-1/#comment-8664 Don't mix business with personal use... Thu, 04 Jun 2009 01:57:45 +0000 http://www.footnoted.com/?p=3782#comment-8664 The disclosure makes it pretty clear that the company reimbursed Michael Dell for business use of his private jet and not personal use of the company's jet. The SEC is pretty clear that business use for anything does not constitute a perk. Thus, this $4 million can't be characterized as a perk (even if $4 million does sound high) and it definitely wouldn't belong in the Summary Comp Table. You can't compare this to another CEO's "personal use" numbers because this was for business use. So, I'm not sure this is a case of Michael Dell having an expensive flying habit. It could be that he had to be flying all over the world to meet with potential clients and investors. It just happened to be that Mike Dell owned the plane. It's just like when I drive my own car from NY to Philly for a business meeting and my company reimburses me for the gas, tolls, parking, etc, when I could have taken a car service and charged it to the corporate account. Actually, this is a case where Dell is disclosing more than other companies, since companies are not normally required to break out the company's expenditures on business-related travel, even for all employees combined. It usually gets lumped in with SG&A. As for calculating costs, the SEC is also pretty clear that it requires companies to report actual incremental cost to the company, and not the assignment of the hypothetical price of a first class commercial ticket on the same route, which is what the IRS requires you to report on a W-2. So, those numbers you see are the actual cost numbers. Keep in mind that those numbers will inflate if the cost of fuel is up in a given year, if the company's planes are large gas-guzzlers, if the company is based in a remote location, etc. Plus, if one leg of the trip was for business, the cost of that leg gets backed out. It can get even more complicated, but that's a discussion for another time and place... The disclosure makes it pretty clear that the company reimbursed Michael Dell for business use of his private jet and not personal use of the company’s jet. The SEC is pretty clear that business use for anything does not constitute a perk. Thus, this $4 million can’t be characterized as a perk (even if $4 million does sound high) and it definitely wouldn’t belong in the Summary Comp Table. You can’t compare this to another CEO’s “personal use” numbers because this was for business use. So, I’m not sure this is a case of Michael Dell having an expensive flying habit. It could be that he had to be flying all over the world to meet with potential clients and investors. It just happened to be that Mike Dell owned the plane. It’s just like when I drive my own car from NY to Philly for a business meeting and my company reimburses me for the gas, tolls, parking, etc, when I could have taken a car service and charged it to the corporate account. Actually, this is a case where Dell is disclosing more than other companies, since companies are not normally required to break out the company’s expenditures on business-related travel, even for all employees combined. It usually gets lumped in with SG&A.

As for calculating costs, the SEC is also pretty clear that it requires companies to report actual incremental cost to the company, and not the assignment of the hypothetical price of a first class commercial ticket on the same route, which is what the IRS requires you to report on a W-2. So, those numbers you see are the actual cost numbers. Keep in mind that those numbers will inflate if the cost of fuel is up in a given year, if the company’s planes are large gas-guzzlers, if the company is based in a remote location, etc. Plus, if one leg of the trip was for business, the cost of that leg gets backed out. It can get even more complicated, but that’s a discussion for another time and place…

]]> By: Anon http://www.footnoted.com/perk-city/life-on-air-dell/comment-page-1/#comment-8663 Anon Wed, 03 Jun 2009 16:25:33 +0000 http://www.footnoted.com/?p=3782#comment-8663 When CEOs are flying in the company jet on personal business, they have to pay taxes on whatever the companies value the plane rides at. In that case, the execs would like to see the cost be recorded as low as possible, to minimize their tax bills. When CEOs are getting "reimbursed" for the cost of tooling around in their own jets instead, they suddenly have every incentive to OVERSTATE those costs. Suddenly, it makes more sense that companies could report wildly different amounts for similar services. Amazing how that works. When CEOs are flying in the company jet on personal business, they have to pay taxes on whatever the companies value the plane rides at. In that case, the execs would like to see the cost be recorded as low as possible, to minimize their tax bills.

When CEOs are getting “reimbursed” for the cost of tooling around in their own jets instead, they suddenly have every incentive to OVERSTATE those costs.

Suddenly, it makes more sense that companies could report wildly different amounts for similar services. Amazing how that works.

]]> By: Frank Graham http://www.footnoted.com/perk-city/life-on-air-dell/comment-page-1/#comment-8662 Frank Graham Wed, 03 Jun 2009 15:44:47 +0000 http://www.footnoted.com/?p=3782#comment-8662 Lot of links today & yesterday about said rise in comp. All his bennies were up across the board like security payments and such. This in face of drop in Dell revs. Dell also going to offer thin notebooks to Mid East. http://www.newsfactor.com/news/Dell-Chief-s-2009-Compensation-Rises/story.xhtml?story_id=0030009Z4OO9 Me I'd rather have played the CRAY stock move. "The highly stylized laptop, the world's thinnest, was introduced at a showcase event in the new Dell Middle East Store located in The Dubai Mall, where models showed off the laptop dressed in ultra-chic and elegant abayas, created by acclaimed Emirati designer Ms Badr Al Badoor of Abaya Couture. Through its association with Abaya Couture in the UAE, and high-end fashion brands like TUMI in the United States, the new Adamo laptop is a key pillar in Dell's consumer product portfolio and has become the standard bearer for the industry in terms of design." http://www.zawya.com/Story.cfm/sidZAWYA20090603093141/Dell%20Set%20To%20Tempt%20The%20Middle%20East%20With%20World's%20Thinnest%20Laptop Lot of links today & yesterday about said rise in comp. All his bennies
were up across the board like security payments and such. This in face of drop in Dell revs. Dell also going to offer thin notebooks to Mid East.
http://www.newsfactor.com/news/Dell-Chief-s-2009-Compensation-Rises/story.xhtml?story_id=0030009Z4OO9
Me I’d rather have played the CRAY stock move.
“The highly stylized laptop, the world’s thinnest, was introduced at a showcase event in the new Dell Middle East Store located in The Dubai Mall, where models showed off the laptop dressed in ultra-chic and elegant abayas, created by acclaimed Emirati designer Ms Badr Al Badoor of Abaya Couture. Through its association with Abaya Couture in the UAE, and high-end fashion brands like TUMI in the United States, the new Adamo laptop is a key pillar in Dell’s consumer product portfolio and has become the standard bearer for the industry in terms of design.”
http://www.zawya.com/Story.cfm/sidZAWYA20090603093141/Dell%20Set%20To%20Tempt%20The%20Middle%20East%20With%20World's%20Thinnest%20Laptop

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