Lifting the Lid-For CEOs, giving up perks may be hard to do

By Martha Graybow

NEW YORK, Nov 19 (Reuters) - Cash-strapped U.S. companies are slashing jobs and paring expenses -- but it remains to be seen if executive perks such as private jet travel and chauffeured cars will go on the chopping block, too.

Chief executives of U.S. companies have long been accustomed to an array of plum benefits, with access to the company plane one of the most desirable.

But at a time of mass layoffs, plunging stock prices and billions of dollars in government aid to Wall Street, some critics say it is time to ground the company jet and reexamine executive perks that can anger shareholders and politicians.

The decision of auto industry chiefs to fly to Washington on company aircraft this week when they were "getting off with tin cups in their hands" for a federal bailout was questioned by Rep. Gary Ackerman, a New York Democrat.

"Couldn't you have downgraded to first-class or something, or jet-pooled or something to get here?" he asked auto executives on Capitol Hill arguing for a $25 billion aid package on Wednesday.

Big businesses routinely use corporate jets for executive travel, saying it is more practical to arrange private flights to avoid commercial airline delays and to expedite last-minute travel and trips on unusual routes.

Many companies also allow -- or in the case of Ford Motor Co (F.N), American Express Co (AXP.N) and others -- even require their CEOs to use the company plane for personal flights, citing concerns about executives' safety.

Such personal air travel is considered a perk included in CEOs' total pay packages. Other perks can include home security systems, country club memberships, home gym equipment and complimentary sports events tickets. The value of these benefits is considered income, so CEOs also sometimes get another perk: company help in paying their personal tax bills.

Giving up perks may not sit well with many CEOs, though pay experts say boards of directors have been trying to curb them in recent years as shareholders have paid more attention to executive pay.

The current economic downturn could be the opportunity to make more cuts, pay experts say.

"I think you will see dramatic cutbacks in perquisites," said Mark Poerio, a partner at law firm Paul Hastings in Washington who advises companies on compensation issues. "On things like the chauffeur-driven car to the office, companies will look at how important it is, and is it worth providing contractually for that."

BANKS IN FOCUS

Already, some banks taking part in the $700 billion federal financial rescue have said their top executives will forego bonuses this year, but perks -- which account for a much smaller part of executive pay -- have generally not been mentioned.

Goldman Sachs Group Inc (GS.N), for instance, has said that CEO Lloyd Blankfein, who took in $68.5 million in compensation last year, and six other top executives, have decided not to accept 2008 bonuses.

The company did not address Blankfein's perks, which last year included $233,053 for a car and driver and $61,246 for financial counseling, according to Goldman's annual proxy. The firm does not own a corporate jet, a spokesman said.

Perks were not included in new government rules limiting executive payouts at banks participating in the bailout.

It is possible that financial firms could grant their executives more perks to make up for limits on the potential severance they could receive if they depart under the new government pay rules, said Alan Levine, an executive pay expert and partner at law firm Morrison Cohen in New York.

"You may see compensation paid in other ways, and perks could be one of those ways," he said.

Companies are expected to examine perks as part of a review by their compensation committees of executive pay in the coming months. While perks typically only account for a small amount of an executive's overall pay, they can become an outsized public relations problem, said Poerio.

"Our advice has been to eliminate them except for those that are critically necessary for business needs," he said. "I think that companies are going to be much more careful." (Reporting by Martha Graybow, additional reporting by Joseph Giannone; editing by Richard Chang)