But rarely do they pay for their own home alarm systems or other personal-security measures. Also, dollars reported as a perk in the company proxy are often a fraction of what companies really spend keeping CEOs safe. Large companies such as ExxonMobil have in-house security experts on the payroll. "The company already incurs these costs as a business expense," the oil company says in its proxy. Even so, ExxonMobil reported $222,985 on the personal security of CEO Rex Tillerson last year, including $57,513 for a trained driver and $122,182 for residential safeguarding.
Companies have long defended the cost of corporate jets because they fold in a layer of security. Security is also the justification for allowing CEOs and their families to make personal trips aboard company aircraft. That is disclosed as a separate perk and not included in the total for security.
Bad economy, good business
Specific CEO security costs that are reported as a perk are escalating, and Chun says that's due to a perfect storm of layoffs, hostility toward executive pay and outrage over exit packages for CEOs once in charge of companies that had to be bailed out by taxpayers. Rick Wagoner, who resigned as CEO of General Motors in March, received $270,450 in company-paid security in 2008.
"When people become desperate, the threat level is raised," says Joe Russo, former Secret Service agent in charge of protecting President Clinton and now in charge of executive protection for T&M Protection Resources.
Neither threats to CEOs, nor spending to protect them, is new. Threats often rise in bad economic times or during difficult labor negotiations. In 2001, after wireless equipment maker Ericsson cut 17,000 jobs, CEO Kurt Hellstroem received a mailed death threat along with a bullet cartridge, the Associated Press reported.
Companies were not required to disclose amounts less than $50,000 until 2006, and companies reporting that they paid for the personal and home security of CEOs rose from 23% in 2005 to 54% in 2006, according to Equilar. FedEx has reported that spending on Smith will fall 23% to $461,405 in 2009, but most companies won't disclose what they are spending on CEO security in 2009 until the spring proxy season of 2010.
Indications are that spending on CEO security has yet to level off. The $10 billion security industry is not immune to recession and expects no growth in 2009, says Mark Visbal, research director for the Security Industry Association. But companies that specialize in protecting the wealthy are having banner years, including 360 Group International. The company's CEO business is up 50% over the last 12 months, says CEO Bill Kirkpatrick, who figures people get mad and make threats when they lose their jobs and see the CEO "hop a Gulfstream."
An accurate trend in CEO threats can't be ascertained because they are rarely disclosed by companies, sometimes not even to police. Tim McKinney, custom home director for industry giant ADT Security Services, which provides electronic security to nearly 5 million commercial, government and residential customers and more than half of the nation's Fortune 500 companies, says there is chatter in the marketplace about a jump in threats to CEOs, "but we don't have firm figures to substantiate it."