It's good to be the king--or in this case, CEO of Sears. At the same time the troubled retailer is shutting stores and laying off "associates," it is paying $800,000 a year to waft Chief Executive Louis J. D'Ambrosio between Philadelphia, where he lives, and Chicago, where he works, by private jet.
The exact amount of these rides, as reported in Sears Holdings' most recent SEC filing, is $793,224.
While using a private jet for one's regular commute might seem excessive, it's just one perquisite among many that public companies are continuing to pay top dogs during tough economic times.
Sears's SEC filing shows it posted its largest quarterly loss in nine years, $3.1 billion. In addition to stores already closed, it shut another 62, including 43 Hometown Stores, 10 hardware stores, all of its nine Great Indoors stores. Sears estimates the layoffs at between 40 and 80 associates per store.
Corporate spokesman Chris Brathwaite responds:
"If you add the cost of his [Mr. D'Ambrosio's] commuting and related expenses to his salary and bonus, you will see that his compensation package is not out of line with his peers at other major companies (Fortune 100 CEOs or other retail CEOS). Also that figure takes into account temporary living expenses (housing) and ground transportation."
According to a ranking by Crain's Chicago BusinessThe Fortunate 100--D'Ambrosio's commuting bill is not the biggest perk among those enjoyed by 100 local CEOs.
As for total compensation, the Crain's list puts Miles D. White, chairman of Abbott Laboratories, at #1, with $25.5 million. D'Ambrosio's total compensation is just under $10 million. A New York Times study of executive compensation found that top executives' median pay increased 23 percent in 2010 to $10.8 million.
Corporate jets are just the top of the perk-berg, according to an analysis of recent corporate filings by Footnoted.com, part of Morningstar.
Former CEO of Massey Energy Don Blankenship, who departed the company in 2010, following an explosion in a Massey mine that killed 29, got $39 million in accumulated retirement benefits, plus $14.4 million in severance and perks. These included five years' use of an office with secretary, free use of a house and land that formerly were Massey property, and reimbursement of taxes on the free house and land ($257, 111).
Martha Stewart, chief content provider for troubled Martha Stewart Living Omnimedia, received $1.95 million just for letting her own company film her television show at one of her own properties.
Jet use, though, remains a favorite perk, even at Expedia, which you'd think would have an inside line on affordable airfares. Expedia CEO Barry Diller racked up $605,786 worth of private jet travel in 2010, plus another $644, 530 over at IAC/InterActiveCorp, which he also runs.
Dan Hubbard, spokesman for spokes-group NBAA (the National Business Aviation Association, which represents users of corporate aircraft) points out that just because a CEO is flitting around on a private jet does not mean that he or other employees aren't also using far cheaper commercial flights.
"We know for sure," says Hubbard, "that our members do not choose one option over the other all the time. Our members spend about $11 billion every year to fly commercial." The look at every flight, he says, on a case-by-cases basis, then decide whether flying private is justified or not. To do so, their use their own internal software or a NBAA tool called 'TravelSense.'
If a company is sending Mr. Big (or Ms. Big) from New York to Chicago (this sounds suspiciously like someone we know), Hubbard says it may be most prudent to have them fly commercial, given the high number and frequency of flights. But if the Big man and his entire team need to go from Altoona to Shreveport, then on to Joplin, and return the same day to Altoona, a private jet may be not just the best option but the only one.