The Toledo, Ohio, auto supplier, which emerged from Chapter 11 bankruptcy protection in January 2008, spent $2.3 million last year on chartered planes to fly its chairman and chief executive, John M. Devine, and its vice chairman and former CEO, Gary L. Convis, to and from their California homes, according to its latest proxy statement.
Dana makes pretty good products, they have a reputation within the auto community that is good. In relative terms some of their stuff is pretty expensive, but you could buy a lot of that for $2.3M and that buying would involve incomes for making it. Note that this is not salary, this is a perk - an add on to their income in value.
Dana sold its six corporate aircraft to cut costs before and after entering Chapter 11 in March 2006. Company spokesman Chuck Hartlage said directors agreed to pay for Messrs. Devine and Convis's commutes to lure the seasoned auto executives out of retirement.
He said the executives' total direct compensation last year, not including benefits, which is valued by the Journal at $8.5 million for Mr. Devine and $6.2 million for Mr. Convis, is "very much in line with similarly situated peers."
Dana also reimbursed the pair for more than $43,000 in taxes associated with the travel expenses, highlighting another controversial benefit: tax "gross-ups" on perks.
Dana isn't alone in the practice of "gross up" and isn't particularly egregious considering the median of 76 companies surveyed is $16,400 but you can consider this:
Oil-field services provider BJ Services Co. spent the most on gross-ups, reimbursing CEO J.W. Stewart $718,800 for the taxes on his bonus and certain equity awards. A BJ Services spokesman was unavailable for comment.
When you're paying the taxes on the things you probably ought to be able to present the stockholders with good reasons for them - or not.
Ferro Corp., a Cleveland maker of industrial coatings, reimbursed CEO James F. Kirsch for a $100,000 initiation fee at the Pepper Pike Country Club. The board had suggested he join "to enhance networking opportunities with other Cleveland area CEOs," according to Ferro's proxy statement.
One company trimmed perks after an unusual shareholder revolt. InfoGroup Inc., an Omaha, Neb., database concern, sold its corporate yacht for $1.5 million in October 2008 after a shareholder suit alleged abusive personal spending by founder Vinod Gupta, according to Securities and Exchange Commission filings.
Mr. Gupta resigned as CEO last August and agreed to repay $9 million. But he received a $10 million severance package and remains on the company's board, according to the filings. Mr. Gupta couldn't be immediately reached.
Go ahead and figure that one out.
I really don't have any real objection to people making money, even a lot of money but there is an issue of how much goes into one place and how much gets spread around the company. There is also an issue as to what the actual value of any given CEO amounts to. It would seem that if the CEO took some level of personal responsibility for the performance of the company, in other words risk, there would be a justification for this kind of compensation.
I'm pretty sure this is a matter of an artificial market price.