Who Pays $24 Million to Protect Mark Zuckerberg?
(Bloomberg Opinion) -- Many of us spent the better part of 2020 trapped in our homes — not able to travel, attend a live event, see a movie on a big screen, or get together with friends and family outside of our immediate pods. But judging from corporate disclosures, it seems these restrictions didn’t apply to a small subset of people — specifically, executives at publicly traded companies.
When’s the last time you attended a major sporting event? For me, it was a Dodgers-Mets game at Citi Field in September 2019. Yet executives at Live Nation Entertainment Inc. received more than $100,000 worth of “tickets to certain music and sporting industry events” in 2020, according to a company proxy statement. That’s about half what they got in 2019, but still pretty impressive given that the company reported in May 2020 that 80% of shows had been canceled. Live Nation didn’t respond to a request for comment.
How about travel? I recently took a cross-country trip for the first time since February 2020. But New Jersey-based Cognizant Technology Solutions Corp. disclosed that it had spent $217,000 in 2020 providing its London-based CEO, Brian Humphries, with an apartment in New York City “as a result of his frequent travel to our New York office.” That’s more than twice what the company spent for Mr. Humphries’s apartment in 2019, despite the sharp decline in New York City rents in 2020. He started as CEO in March 2019. A spokesman for Cognizant said that the lease was renewed in 2020 “before the world knew the severity of the pandemic.”
Some companies dispensed with corporate apartments, a popular perk among the C-suite set. Biotech company Seagen Inc. disclosed that while it had spent $165,000 on corporate housing and travel for Chief Medical Officer Dr. Roger Dansey in 2020, it discontinued the rental of his corporate apartment because “travel to our corporate headquarters was limited” due to Covid-19. A spokeswoman for Seagen said the company had no plans to reinstate the perk. After paying $77,000 in 2020 to rent a Seattle apartment for CEO Scott McFarlane, tax software provider Avalara paid another $24,000 to terminate the lease in October. Avalara offered no comment.
Security costs were another big item. Silicon Valley-based software company Workday disclosed spending $2.6 million in 2020 keeping CEO Aneel Bhusri safe — a more than four-fold increase over 2019. The company attributed the added cost to Covid-19, which required Bhusri to split his time between two residences, and to an unspecified threat to family members that was distracting the executive. Workday had no further comment.
The bigger boon to the security industry, though, were Facebook executives Mark Zuckerberg and Sheryl Sandberg, whose safety cost the company $24 million and $7.6 million in 2020, respectively. The company said that the expenses were elevated in 2020 due to “costs relating to security protocols during the Covid-19 pandemic, increased security coverage during the 2020 U.S. elections and market increases in the cost of security personnel.” A spokesman for Facebook added that “Mr. Zuckerberg is one of the most-recognized executives in the world in large part as a result of the size of our user base and our continued exposure to global media, legislative and regulatory attention.”
All of these disclosures are theoretically visible to the shareholders who are paying for the perquisites, but one must be willing to pore over proxy statements. Companies typically present the information as “all other compensation” in summary compensation charts — a disclosure mandated by the Securities and Exchange Commission — and then add relevant details in footnotes, often in very small typeface. I call it non-disclosure disclosure: there, but accessible only to the determined.
Supreme Court Justice Louis Brandeis famously wrote that “sunlight is said to be the best of disinfectants.” As far as I can tell, it has yet to have much of a cleansing effect on corporate perks.
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