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Network World - Some tech boardrooms go to expensive lengths to protect the top brass, authorizing company funds for cars, drivers, bodyguards, and home security systems to keep the CEO safe.
The cost is high, but proponents view safeguarding the CEO as a necessary business expense. The CEO is among a company’s most valuable assets, and protecting that asset can minimize corporate risk and align with shareholder interests.
Network World analyzed pay packages at 49 tech companies and found seven that itemized security-related perks received by the CEO. One of the most expensive programs is at Oracle, which paid $1.5 million to secure CEO Larry Ellison’s primary residence.
“We require these security measures for Oracle’s benefit because of Mr. Ellison’s importance to Oracle, and we believe these security costs and expenses are appropriate and necessary,” Oracle wrote in its proxy statement. Ellison paid for the procurement and installation of the security equipment, and he’s responsible for maintaining the system. Oracle pays for the annual costs of security personnel.
At a time when executive perks in general are on the decline, CEO security is one that has staying power.
“We’re definitely seeing a removal of perks, particularly the perks that would be considered shareholder irritants, like excise tax gross-ups,” says Joe Sorrentino, managing director at Steven Hall & Partners, an executive compensation consulting firm in New York. “One perk that still has some staying power is corporate aircraft usage,” Sorrentino says.
Companies often justify letting the CEO use corporate aircraft for personal travel because of security concerns -- the same reason they fund personal and residential security programs.
The security perk “is still pretty common for the very large, high-profile companies -- defense companies, major consumer goods companies ... financial services firms,” Sorrentino says. “We’re not seeing any increases in [security-related] perks. However for the big-name companies, it’s not surprising to see it. I don’t think it’s a majority, but it’s a healthy minority.”
Salesforce.com worked with a security consulting firm to design CEO Marc Benioff’s security program, which it deems “necessary and appropriate for the protection of our CEO given the history of direct security threats against the senior executives of major U.S. corporations and the likelihood of additional threats against these individuals in the future.”
Salesforce.com established its security program in 2012 “in response to bona fide business-related security concerns for our CEO,” the company stated. Last year’s security costs for Benioff came to $648,456, which included physical and personal security services, including on-site residential security.
“As our founder who has led the Company for more than 13 years, our CEO has overall responsibility for our business strategy, operations, and corporate vision. The Compensation Committee not only believes that ensuring his personal safety is vital to our success as an organization going forward, but that establishing such a program would be a prudent action in light of its overall risk management responsibilities,” Salesforce.com asserted.