I spent some time recently in England and experienced for the first time the concept of monarchy. Seeing the English King’s palatial estate at Hampton Court brought home the opulence of the 17th century monarchy. Clearly there was no distinction between the possessions of the monarchy and those of the country. I have seen CEOs who share this view: They make no distinction between the personal resources of the CEO and those of the company, which will eventually cause problems.
This attitude often develops from the early days of a company when the CEO sometimes personally provides the resources for the company. If all of the capital for the business is coming out of the CEO’s pocket, it is understandable that the distinction between the two may be blurred. Unfortunately, many CEOs continue to blur this line after taking on investors and even public shareholders.
Often CEO perquisites start small and grow over time. The challenge for the CEO is the impact these perks have on the ability of him or her to lead. When you are constantly receiving fringe benefits, it is hard for employees to believe you care as much about their own wellbeing as you do your own. Few employees will ever directly comment on this, so it is critical for a CEO to have the self-awareness to recognize these issues before they become problems.
Any benefits you receive that are above what the normal employee receives should be closely scrutinized. Reserved parking spots, assistance with personal errands, and special travel privileges are all things to be avoided. CEO pay is an area of special concern since for public companies the information will be made public. I believe CEOs should negotiate for an appropriate market based compensation package, but it looks bad when the company pays for additional items outside the normal salary. Including compensation for home security, personal travel or tax compliance – as some companies do – makes employees question the motives of everyone involved. Negotiate an appropriate compensation package, but keep all the extras out of the deal. If you make so much money that you need special tax help, you should be able to pay for it yourself.
One last item that I see CEOs abuse is the area of charitable contributions. Some CEOs enjoy the attention they receive from making corporate contributions and basically use these contributions to support their personal entertainment and lifestyle interests. There are CEOs who could qualify as professional golfers for all the time they spend at charity golf tournaments on the company’s dime.
I am a big believer that corporate contributions should be tested against the same decision triangle as other business decisions. How does the action balance the needs of shareholders, employees and customers? In my experience, it was not unusual for an employee to come and ask if the company could make a contribution to some charity that the employee supported (usually something their kids were involved in). While these were often good causes, they rarely made any sense from a business perspective. I developed a standard offer in these cases. I would offer to personally match any contribution that the employee made to the cause. Surprisingly, once most employees realized there was no “free” money to be had from the business, I would never hear anything more about it. If they wouldn’t invest their own money, why should the business make the investment?
Are you a Playboy King CEO?
- Do you receive benefits from the company that normal employees don’t?
- Are there rules that other employees must follow that you exempt yourself from?
- Do you use resources of the company in a way that benefits you personally?