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Flexing just a little too far…

images5.jpgWith the increased compensation disclosures now required for public companies’ annual proxy statements, we’ve seen a growing trend in companies adopting a “flexible perquisite” program – United Technologies (UTX) and Tyco (TYC) are two examples that come to mind. Companies with flex perk programs often claim that such a policy helps “(i) to administer a standardized perquisites program for all executive officers aligned with market practices and (ii) [to] simplify and clarify our perquisite allowance for our shareholders.” That’s the reasoning that Dayton Power & Light (DPL) gave in its recent proxy for its flexible perk program. At DPL, each executive officer receives a $20,000 perquisite allowance paid in full at the beginning of each calendar year, which company says the executive may use “to purchase his or her own perquisites such as financial planning, annual physicals, additional life insurance or disability benefits.” Of course, the allowance might just go in the executive’s pocket, since there’s no mention of having to provide any documentation to support the legitimacy of such expenses. A further read of the proxy uncovers that DPL’s flexible perk program is in addition to many other perks awarded that are not covered by the program, including personal airplane usage, personal legal fees, temporary living expenses, tax gross-ups, and even the $250,000 commuting reimbursement received by Executive Chairman Robert Biggs. With such a liberal awarding of perquisites, we think the extra $20,000 that DPL hands out is flexing right across the borders of Perk City.