To what do we owe this “progress”? Corporate boards of directors appear to be listening to their public relations consultants. They’re cutting back on those perks — tax reimbursements, for instance — most likely to inflame how the public feels about executive compensation.
The IRS currently requires corporate execs to pay personal income tax on the value of the perks they receive. Corporate boards, to ease this terrible injustice, have been reimbursing execs for the taxes on perks they have to pay — and then reimbursing execs some more for the taxes on this initial reimbursing.
The math here can get complicated. But the message these tax reimbursements send to the general public couldn’t be simpler: Only the little people, Corporate America shouts out with tax reimbursements, ought to have to pay all their taxes.
With joblessness at double digits, some corporate boards have apparently realized that this particular message might not resonate too well outside their boardrooms. Last year, the number of Fortune 100 corporations offering their CEOs “gross-ups” — the insider label for tax reimbursements — fell by half. And gross-ups averaged just $13,911 last year, down from $26,936 in 2009.
Other perks — like free corporate jet travel and financial planning services — show similar downward trajectories. The only CEO perk that’s increasing appreciably in value: home security. Corporate boards must be fearing, as the Great Recession lingers, the growing rage of America’s great unwashed.
But these same corporate boards keep giving Americans, washed and unwashed alike, reason to rage. In 2010, the typical top 100 CEO perk package did drop — by a little over $20,000 — from the year before. Total CEO pay for top 500 CEOs, on the other hand, increased over $2 million from the year before.
We certainly do need more disclosure on CEO compensation. But we need, these latest CEO pay totals show ever so plainly, much more than disclosure.