This post is by Michelle Leder from footnoted*
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It’s been well-documented both here and other outlets (see this WSJ story for example) that the corporate jet is one of those perks that CEOs love more than just about anything else. And what’s not to love, given the hassles of flying commercial these days?
We thought about that when we saw this interesting comment letter that was publicly released yesterday about how much Facebook is spending on CEO Mark Zuckerberg’s travel. As the letter makes clear, it’s a lot more than the $610K that Facebook has publicly disclosed previously in its most recent proxy statement.
That’s because Facebook says that number only reflects “personal use of aircraft chartered in connection with Mr. Zuckerberg’s overall security program and on which Mr. Zuckerberg and guests flew” and not the business expense of any security provided. Here’s the way that Facebook’s external counsel, Fenwick & West, put it in the letter to SEC:
“the Company believes that the costs related to Mr. Zuckerberg’s overall security program (both at his personal residences and during personal travel) are integrally and directly related to the performance of his duties as the Company’s Chief Executive Officer and are, therefore, not considered perquisites and other personal benefits in accordance with Commission rules.”
As with most things in SEC filings, there’s no clear line: the cost of these perks really depends on what’s personal and what’s business. As WSJ reporter Mark Maremont wrote several years ago, there’s a lot of leeway between business and personal expenses when it comes to private jets.
We’ve seen some big expenses for personal security in other proxies. Amazon, for example, has spent $1.6 million a year for each of the past three years to provide security to CEO Jeff Bezos, according to their proxy statements. And Oracle has disclosed spending about the same amount for each of the past three years to provide security to CEO Larry Ellison’s homes, according to their proxy.
Facebook’s letter goes on to talk about Zuckerberg’s “unique position. He is synonymous with Facebook and, as a result, malicious and negative sentiment regarding the Company or its products is directly associated with, and often transferred to, Mr. Zuckerberg. Moreover, Mr. Zuckerberg has had to frequently travel domestically and internationally due to the global nature of the Company’s business and in support of the Company’s mission to make the world more open and connected, which has elevated such safety risks.”
But after a month of what appears to be back and forth between the SEC and Facebook’s attorneys over personal security costs, the company agreed to provide that number in the 2016 proxy. What will be interesting is whether that number is a lot higher than that of other high profile CEOs.