Paying the tax man…

March 27, 2008

guccibag.jpgPerks are a popular topic here at Footnoted. Some might argue, though, that it’s petty to focus on these personal goodies (however amusing), because even the zaniest perks rarely have a material impact on a company’s financials.

But you can turn that logic in the other direction and ask why more CEOs don’t just use their own money to pay for smaller-ticket items like financial advice and tax preparation, which have become common executive perks. Many lesser mortals manage to pay their own accountants, after all. While companies often claim to benefit when executives get professional help with personal finances (the theory being that they spend less time fretting about their tax returns and more time fretting about the company’s performance), this would seem equally true if managers paid for the advice out of their own pockets. And then they could spend less time fretting about perk-watching bloggers.

Yet these perks persist, perhaps because they’ve become a status symbol — kind of like Gucci logo handbags, though not as ugly.

So I’ll grab a random proxy from this week’s pile and point the Footnoted fickle finger of fate at Steven Loranger, Chairman/President/CEO of defense contractor ITT Corporation (ITT), whose comp last year totaled a nice $13.7M. (ITT was footnoted here last fall, thanks to the unpleasant subject of arms trafficking.) True, much of Loranger’s payout was in equity, but surely he could have scrounged up $37K in cash to pay for his own “financial counseling.” He didn’t, however. He got it as a perk instead, so here he is in a blog post.

Let also give a shout out to former Manitowoc (MTW) CEO Terry Growcock (total comp $7.9M), who charged his employer for a startling $52K in tax preparation fees last year (proxy here). Funny, that’s the same amount Kraft Foods (KFT) spent on financial counseling for Kraft International head Sanjay Khosla, who earned about $3M (proxy here). And then, naturally, there’s Time Warner (TWX) Chairman Dick Parsons, who earned $18.6M last year while enjoying $100K in company-paid “financial services” (proxy here). You have to wonder if people spend more on financial advice when someone else is picking up the tab.

Thanks, guys. We love perks!

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