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The L-Blast | May 2021

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This year is just flying by as the school year comes to an end, and with it another disrupted proxy season due to the pandemic. After the difficult events of 2020, companies had much to answer for this year, but as proxies wind down, we have the opportunity to refocus our energies on the challenges ahead.

In this month’s L-Blast we turn our attention to the topic of executive perquisites or “perks.” In our original article, we share the basics on executive perks and provide a pulse on perquisites and their prevalence today. 

In the following article, compensation considerations for this proxy season are shared – among them, guidance on perquisites disclosure and SEC enforcement, specifically regarding benefits provided due to COVID-19 and whether or not they constitute a perquisite. This guidance will likely hold true for next proxy season as well. 

As you’ll see on the next piece, the SEC is looking at disclosure of perquisites very closely and is not afraid to impose penalties on those who fail to report accurately. As a result of this, and to maximize deductabiltity of executive compensation, companies are re-evaluating their strategies, in some cases opting to eliminate perquisites. 

In this month’s “Did You Know” piece, I share the interesting story of Jack Welch and how it led to the SEC’s increased scrutiny and disclosure requirements on executive compensation and perks. A good lesson for us all. 

Stay tuned for our next L-Blast where we will share the key takeaways from our Remote Work and Return to the Workplace survey. Thank you to all those who participated. Stay safe, and as always, let us know if there is a particular subject you’d like to learn more about or if you have any questions about the topics covered in this L-Blast. 

Sincerely,

Brent Longnecker and the L&A Team

Chairman and CEO, Longnecker & Associates


Executive compensation in the eyes of shareholders and outside observers is a complex, intriguing subject matter that always has people talking. As for public company executives, with their compensation required to be disclosed, the discussion around how much the company leaders are being compensated always appears as a topic of interest. Looking closer at the details surrounding executive pay, in the fine print you’ll see the extra benefits or perks that come along with a high-valued job.

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Companies poised to enter into the upcoming annual report and proxy season should start disclosure preparations early in order to address the complexities that will have inevitably resulted from an unprecedented 2020. In particular, companies will need to take proactive steps to evaluate the impact of the COVID-19 pandemic on executive compensation, the role of new human capital management disclosure requirements… 

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Over the past few months, the Securities and Exchange Commission (the “SEC”) has imposed civil penalties in the hundreds of thousands of dollars against multiple publicly traded corporations in connection with their failure to disclosure certain perquisites and personal benefits provided to senior executive officers, including travel, lodging and entertainment fringes and expenses.

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EXECUTIVE PERQUISITES – STEALTH COMPENSATION AT ITS BEST!

Jack Welch – a past CEO of GE – might be known for a lot of things, but for me he will always be the reason the SEC will forever watch, review, and opine on executive perquisites (perks). He had a truly stealth package of perks until he decided to divorce his wife of fourteen years and offer her a ridiculously low settlement. As a result, his compensation quickly went from the boardroom to the courtroom. And once known in the courtroom, the SEC took note and would forever change the disclosure required around departed executives AND executive perks. 

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Our Say on Pay specialists are ready to assist you in shareholder outreach to educate investors about the strategy and reasoning behind executive compensation plans and clear any confusion and misconceptions. A properly structured outreach plan can help ensure positive voting outcomes while strengthening your governance practices overall. Get the most out of your shareholder outreach engagements.

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