Posted by: David Welch on November 21, 2008
With all of the hoo-hah over corporate aircraft flying about, let’s take a look at the cost. It does add up to some big bucks. Big companies have to report the price tag for the corporate planes and other perks that they give to their executives. Last year, Ford CEO Alan Mulally racked up $752,000 for use of the corporate plane, which his family also gets to use to ferry back and forth from their home in Seattle, according to Ford’s proxy statement. Last year, Mulally’s perks that fall under “perquisites and other personally benefits” added up to almost $1 million. Mark Fields, Ford’s executive vice president-Americas, spent a comparably little $29,000 flying commercial aircraft to his home in Florida. And by the way, last year Ford paid almost $300,000 to Pentastar Aviation for corporate use. That company is owned by Edsel B. Ford II, Chairman Bill Ford’s cousin and a board member.
General Motors paid out a pretty penny for executive air travel, too. GM’s proxy says that Chairman and CEO Rick Wagoner cost the company $45,000 in personal air travel. President and COO Fritz Henderson’s bill was $21,000 and Vice Chairman Bob Lutz globe trotted to the tune of $190,000. In all, GM spent $675,000 on personal air travel, security and other perks for its top three executives last year. That is real money.
But let’s stay grounded on the subject of company planes. There are legitimate reasons for having them. Executives are starved for time and if the companies are global—and these two automakers truly are—the top brass are required to fly all over the globe to meet a battery of meetings. Waiting hours in a terminal is not a good use of their time. Security is also a real issue. Most Fortune 100 companies use private aircraft of some kind.
The issue is how the planes are used. Do top executives need to gas up the corporate plane to fly to Washington D.C.? No, especially if they are going on a mission for government help. The elitist image it broadcasts is why the executives are getting hammered over perks and pay today. Do they need it for personal use? Not if they’re losing this kind of money. They simply have cut to perks everywhere—even if the impact of the cuts is more symbolic than financial—to show that they are getting lean and turning over every stone to conserve cash. Congress sent its message loud and clear: The government and tax payers do not want to underwrite largesse to executives and even the rank and file. GM has cut its fleet from seven planes to three. Maybe they will set limits on who has access and why they use them. In this environment, they’re going to have to if they want Congress to think that they are serious about getting lean and saving every penny.