When High Security is a CEO Perk

December 03, 2007 — CSO —
Quick quiz: When does the CEO of a big technology company actually love security?

Answer: When the executive protection team decides that the CEO needs to travel by private jet or limo anytime, anywhere, whether alone or with family members--for security reasons.

According to an analysis of proxy statements filed with the Securities and Exchange Commission by the U.S.’s largest technology companies, corporate jets and automobiles are sometimes considered not luxury items or fringe benefits, but part of the necessary cost of executive protection--not a bad perk for the holiday season.

At IBM, the country’s largest technology company, "security practices provide that all air travel by the Chairman and CEO, including personal travel, be on Company aircraft,” according to the most recent proxy statement. The CEO also is driven to and from work by IBM personnel in a car leased by IBM, which may also be used for non-business occasions--again, for security reasons. In all, the company spent $373,187 on CEO S.J. Palmisano’s personal use of company aircraft and $53,409 on personal security. This includes home security and monitoring systems, as well as security personnel for Palmisano and his family and the cost of hotels, meals, car services, airfare and salary for those security personnel. It’s a decent chunk of Palmisano’s total “other compensation” of $922,530.

Likewise, at Xerox, CEO Ann Mulcahy is required whenever feasible to use the company aircraft for travel for “security and personal safety.” Using this criteria, most of Mulcahy’s “other compensation” can be classified as a security expense. Of the $296,026 listed under “all other compensation” for Mulcahy in the 2007 proxy statement, $193,300 was spent on personal use of the corporate aircraft, and another $18,679 went towards home security and other miscellaneous benefits. (“All other compensation” typically includes things like matching 401(k) contributions, home relocation assistance, financial planning and other perquisites.)

In terms of security perks, however, those numbers aren’t even the big ones. Oracle reportedly spent a whopping $1,708,763 on security for CEO Larry Ellison. The proxy states that Ellison is required to have a home security system but is mum on most other details about what that $1.7 million includes.

And Dell reports spending $1,051,000 on personal and residential security for CEO Michael Dell in FY07. According to the proxy statement: “The Board believes that Mr. Dell’s personal safety and security are of vital importance to the company’s business and prospects, and therefore that a