US executives enjoy extra corporate jet perks under Covid

Big US companies, including Morgan Stanley, Yum Brands and PepsiCo, expanded private jet privileges for top executives last year due to the Covid-19 pandemic, new regulatory filings show.

Yum Brands gave its chief executive David Gibbs authority to approve personal travel on the company’s jet for other executives, and Morgan Stanley authorised certain executives to use the company’s aircraft for personal purposes.

Delivery company UPS gave Brian Newman, its chief financial officer, use of a private jet for personal reasons because of the pandemic but said the perk “is not expected to be a regular practice”.

Stemming from the pandemic, the cost of PepsiCo chief executive Ramon Laguarta’s personal trips doubled in 2020 from the previous year.

Bubble wrap-maker Sealed Air allowed executives to use private jets, including for travel between its North Carolina headquarters and locations “where the executive’s family was sheltered in place”. The policy stopped at the end of 2020.

Though executives’ private jet travel has drawn public ire in the past, the pandemic “is the one time that it probably makes sense to have done this”, given limited availability of commercial flights in 2020, said David Yermack, a professor at the Stern School of Business at New York University who has studied executives’ private jet travel.

However, the jet expenses raise questions over the extent to which jets were being used for vacations, he said. “It is not the plane, it is the vacation trip itself that I find interesting,” he said. “Why are they going on vacation at all?”

Dieter Waizenegger, executive director of the CtW Investment Group, agreed that the expanded jet privileges during the pandemic seemed “reasonable” but said it was disappointing that company concerns for executives’ health did not always extend to frontline workers. He pointed to Yum Brands, which this year challenged a CtW shareholder proposal at the company calling for a feasibility study of expanding paid sick leave to all its workers.

Yum Brands and Morgan Stanley declined to comment.

UPS has not changed policies related to personal use of private aircraft, and a single exception for Newman was approved “at the beginning of the pandemic due to the significant uncertainty that surrounded commercial air travel at that time”, the delivery company said.

Corporate spending on private jets increased during the past year. The median value of Fortune 100 companies’ spending on private jets increased to $125,796 for firms with fiscal years ending by August 31 2020, according to Equilar, a pay data company. The figure was up 9 per cent from 2019 and in line with $128,075 spent in 2018, Equilar said, adding that the spending totals vary because of changes in jet fuel costs.

US disclosure rules require companies to report various perks companies give their executives that total $10,000 or more. In addition to private jet travel, companies disclose paying for executives’ club memberships or financial planning. 

Overall, private jet flights dropped during the pandemic. Teterboro airport, which is close to Manhattan and is one of the busiest private jet landing spots in the US, saw flight departures drop by 50 per cent in 2020 from the year earlier, according to Argus International, an aviation rating agency.

Source link

Related Articles

Back to top button