Foreclosures Have Made Life for CEO’s Expensive and Fraught With Fear
October 26th, 2009
Contrary to popular view the CEOs are not just wallowing in bonus and perks but foreclosures have made life for them expensive and fraught with fear.
Firms have been cutting down roots and branches to somehow survive through this recession and yet they are being compelled to spend huge sums on the CEO’s who are afraid of their personal security.
Starbucks that had shut stores and laid off em0loyees have nevertheless spent in 2008 $511,079 or the personal security of its CEO Howard Schultz. $595,875 was spent by FedFex for its CEO Fred Smith. Walt Disney exhausted $645,368 for its CEO Robert Iger , Occidental Petroleum used $575,407 for Ray Irani and McKesson paid $401,706 for John Hammergren.
It may be termed as a hysterical paranoia but it is unavoidable. Lat year 110 firms in the corporate sector spent $65,345 marking an increase of 123% from 2007 expenses of $29,291 according to the findings of Equilar that conducted research in compensation for executives. Ten firms spent $4.6 million for beefing up the security of CEO’s in 2008 – 40% higher than the ten largest spenders of 2007.
The question arises if in these hard days such spending is justified. The companies answer in the affirmative while filing their data with Securities and Exchange Commission. The explanation is that these expenses are linked with the protection of the interest of the shareholders. But not all are willing to accept this line of argument and say that uppermost on the agenda is the benefit of the company and those who run it.
The foreclosure climate has made the CEOs very unpopular. In September the vacation house of Daniel Vasella (CEO of Novartis) was vandalized. In July the urn of his deceased mother was taken away from a cemetery and the grave of his sister was also desecrated. Crosses were placed on the names of Vasella and his spouse.
David Chun of Equilar said, “Given several notable incidents of violence towards executives, it doesn’t come as a surprise that companies are taking increased measures.”
The film world has by and large skipped recession. John Marshall of Commonwealth Studios said, “Still, when I get in the car I hit the button that locks all the doors, all the little things available to me.” His gated home is protected by electronic locks and if the alarm sets off there is a well planned escape route for the family. While working he has employed round the clock guards. For a security consultant he has been paying a six figure salary.
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