Aon’s ex-pat games: London on $1,537 a day…
Moving the HQ means moving the top brass as well, and that’s where — in our narrow view — things get pretty interesting. Because Aon is making sure it’s worth its executives’ while to make the move, and it’s splashing out quite a bit of hard cash to smooth the transition, according to the International Assignment agreements it filed with an early-Friday 8-K.
Consider the deal that Chief Executive Greg Case is getting to move across the pond. To start with, his agreement promises him $135,000 a year as an “annual foreign service allowance,” paid as part of his regular paycheck — a raise, in effect, for moving overseas. But he also gets another $336,000 — or $28,000 a month — as an
“annual housing allowance … to be used to pay accommodation and furniture rental costs and associated utility costs (excluding telephone and internet access which are personal expenses).”
Good thing the company isn’t picking up phone and Internet access — I mean, we wouldn’t want to go overboard, right? But the housing allowance will be adjusted annually “to reflect foreign exchange and local market rate variation,” and Case will have to cover his U.S. housing costs himself, should he keep his current residence there.
But housing and, um, foreign service costs apparently don’t begin to cover the difference between Chicago and London. Ergo, Case also needs (and gets) a $90,000 annual cost of living allowance, “intended to replicate your U.S. purchasing power in London and … based on a family size of four.”
Moving involves a lot of one-time costs as well, and it would be foolish to expect Case to cover that with the $1.5 million he made in salary last year, or his $17 million in stock awards. And, to be fair, companies do usually pay the cost of work-dictated moves — but in our experience, typically not in addition to a one-time, $80,000 “relocation allowance” that is “intended to cover all miscellaneous expenses not covered by other provisions included in your relocation package.”
By our tally, that comes to $561,000 a year extra — effectively, a 37% raise over his current salary, and the equivalent of $1,536.99 a day — plus full moving expenses and another $80,000 for all those miscellanea. When he moves back to the U.S., of course, the company will pay transportation and moving costs (and we wouldn’t be surprised to see another hundred grand or so go toward “resettlement costs” or the like.)
In addition to Case’s full attention to the job in London, the company is getting something in return. It can claw back up to a year’s worth of benefits if Case quits to work for a “direct competitor” or does so within a year after he returns from the U.K.
Other Aon executives get similar deals, though in some aspects a little less rich, since it’s presumably cheaper to be relocated when you have a less lofty title. Christa Davies, the company’s chief financial officer, gets a foreign service allowance of $15,000 a year less, though the figure is apparently going to be worked into her target bonus amount, which will be 150% of her salary and the $120,000 allowance. Her housing allowance will be just $252,000 a year, and her one-time relocation stipend just $76,667 — but she’s also getting $34,500 a year in “school tuition allowance” and $23,500 for a car allowance, plus one round-trip ticket to the U.S. per family member per year (and two trips for immediate family members left behind in the U.S., like college-age kids). Davies also gets another $419,976 for agreeing to waive the right to quit and get severance because her workplace is moving — something Case did for free (or at least, for no extra cash). She also benefits from a “tax equalization policy” making up for any difference between U.K. and U.S. taxes, and expanded tax-prep and financial-planning assistance.
If we were Chicago’s community leaders, we wouldn’t wring our hands about losing a big multinational outfit. We would embrace these agreements as evidence of just how affordable the city really is. And let’s face it, Aon grew to be a major global company there on the banks of Lake Michigan, so the Windy City can’t be too terribly constraining.
Then again, if Joe Mansueto should be reading this, we just want to be clear: We’re willing to move to London for a lot less. Give us a shout.
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