One-fifth of U.S. CEOs get tax perks - study

By Martha Graybow

NEW YORK, April 1 (Reuters) - One-fifth of U.S. chief executives get help from their companies in paying their income tax bills, a new study from corporate governance research firm The Corporate Library has found.

The report, released on Tuesday, found that 657 out of 3,297 large U.S. companies tracked by the governance group helped pay some portion of their CEOs' tax obligations. The study was based on pay data in regulatory filings in the 12-month period that ended in February.

Companies typically provide so-called tax "gross-ups" to executives to help cover tax penalties on perquisites such as airplane use for personal travel, housing, gifts, financial planning and country club dues. Some CEOs also get reimbursed for taxes on bonuses or restricted stock awards.

The tax help is a little-known executive perk that must be disclosed in annual proxy filings to shareholders. Study author Paul Hodgson questioned why investors must help foot these bills.

"That the prevalence of tax gross-ups for CEOs -- despite the increased scrutiny arising from the introduction of more detailed disclosure compensation requirements -- comes as something of a surprise," wrote study author Paul Hodgson, a senior research associate at The Corporate Library. "It shows that boards or CEOs, or both, are more thick-skinned than we took them to be."

When CEOs get the tax reimbursements, those payments themselves are taxed. To compensate for that, companies then "gross up" the tax payments to an even higher level so that the executives do not have additional tax liabilities, Hodgson said.

This is the first study on tax reimbursements by The Corporate Library under new regulatory disclosure rules on executive pay, so no comparative figures for prior years are available, Hodgson said.

According to the study, the highest amount paid as a tax gross-up in the 12-month period was for R. Chad Dreier, CEO of home builder Ryland Group Inc (RYL.N: Quote, Profile, Research, Stock Buzz).