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Fortune 100 CEOs shunning corporate jets

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Press Trust Of India New Delhi
Last Updated : Jan 29 2013 | 2:16 AM IST

The job of heading the world's top companies seems to have become less 'high-flying' as CEOs are cutting down on their personal visits in corporate jets, thanks to enterprises slashing such perquisites to them.

While it is rare in India for companies to make public details about the personal use of corporate aircraft by their CEOs, it is mandatory to make such disclosures in the US and other Western countries.

According to a new study, the personal use of corporate jets by the CEOs of Fortune 100 companies — the 100 biggest companies in terms of size — has reduced both in terms of value and prevalence after several years of consistent rise.

"From 2006 to 2007, both the median value and prevalence of aircraft-related perquisites declined for Fortune 100 chiefs," US-based executive compensation research firm Equilar found. These declines seem to offset several years of consistent growth in the use of aircraft by CEOs, Euilar said. Some well-known Fortune 100 CEOs include legendary investor Warren Buffett, Indian-origin banker Vikram Pandit, cola-queen Indra Nooyi and media moghul Rupert Murdoch.

Besides Berkshire Hathaway, Citigroup, Pepsico and News Corp, headed by these four honchos, respectively, the Fortune 100 companies also include Wal-Mart, General Motors, General Electric, Ford, Bank of America, IBM, Intel and Coca-Cola.

In value terms, the average perquisites related to the personal use of corporate aircraft by Fortune 100 CEOs fell by 9.8 per cent in 2007, Equilar said.

Besides, the prevalence of Fortune 100 CEOs reporting personal use of corporate jets by their CEOs also fell from 78.5 per cent in 2006 to 74.7 per cent last year. Citigroup, the world's biggest bank, allows its India-born CEO Vikram Pandit to fly anywhere in its corporate jet on a condition that he would have to pay the company back for any personal use of the aircraft. However, the company has not disclosed any such reimbursement since Pandit's appointment late last year.

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At another Fortune 100 company, Berkshire Hathaway, its Chairman and CEO Buffett has made it clear that he would not fly in the company jet for personal visits. Incidentally, Buffett does not even use the office car and pays back the company for minor items, such as phone calls and postage. Among other companies, ExxonMobil makes it mandatory for its CEO to use company aircraft for both business and personal travel, citing security reasons.

Besides, Dow Chemical has limited personal aircraft use to its CEO only, while UnitedHealth Group has now prohibited the personal use of corporate jets by any of its executives.

According to Equilar, the median value of Fortune 100 CEO aircraft perquisites had been rising continuously for three years before falling in 2007.

It rose from $89,246 in 2004 to $198,579 in 2005. In 2006, it stood at 221,676 before falling in 2007 to $109,743.

The prevalence of such perquisites also dropped in 2007 after three consecutive years of surge.

It had risen from 59.4 per cent in 2004 to 68.4 per cent in 2005 and further to 78.5 per cent in 2006, before falling to 74.7 per cent last year. Both value and prevalence figures for 2007, however, still exceed those in 2004 and 2005.

Besides, according to Equilar, CEOs at 12.6 per cent of Fortune 100 companies in 2007 received tax reimbursements in connection with corporate aircraft use, down from 27.4 per cent of Fortune 100 CEOs in 2006.

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First Published: Sep 01 2008 | 12:00 AM IST

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