TEXT OF INTERVIEW
Kai Ryssdal: The New York Times had one of those pieces this weekend that just kinda makes you stop and say, “Wait, what?” Seems the folks who work on Wall Street are set to earn just about as much this year as they did before the economy went south. The paper says thanks to the strong first quarter they had, six big banks have set aside more than $36 billion to pay their employees. But paychecks and bonuses are only part of the compensation package for a lot of CEO’s on Wall Street. Many of them get some really nifty perks, too. We’ve called Michelle Leder for help combing through the fine print of all those employment contracts. She runs footnoted.org, that’s a Web site that explores the fine print full time. Michelle, thanks for being here.
Michelle Leder: Thanks for having me, Kai.
Ryssdal: You’d have to think, wouldn’t you, in this day and age, given what’s going on out there, that the perks CEO’s are getting would be, if not frowned upon, then somewhat more rare. But really that’s not the case.
LEDER: Not at all.
Ryssdal: Well, so what are you finding?
LEDER: The former chairman and CEO of Time Warner, for example, you know, he left as CEO about a year ago and then he left his chairman at the end of the year. But, you know, when he left part of his employment contract was that he got an office — $776,000 to furnish an office for one year. Now that makes for a really, really nice office, I would imagine.
Ryssdal: That’s right. Now, there’s corporate travel, there’s the jet, there’s all these things that these guys get, right?
LEDER: There’s the, CEO of J. Crew, he now has a helicopter at his disposal because the corporate jet isn’t enough. I was joking around about it, but he’s mimicking the first family, in the sense that they have a helicopter, he has a helicopter now. J. Crew is a big company that the Obamas like to wear. You know, it’s like the biggest fan.
Ryssdal: Don’t these companies, though, have boards of directors whose job it is to keep an eye on these kinds of things?
LEDER: They do have boards of directors, so you have to wonder why are these boards still giving away the store, particularly when the companies are not performing very well. I mean, Abercrombie & Fitch, for example, their CEO spent $1.1 million on personal use of the corporate jet. We’re not talking about business meetings. I don’t really have a problem when the companies are doing this for business travel. It’s a pain in the neck to fly. But $1.1 million in personal travel really calls into question, Where is the board of directors, and what are they doing?
Ryssdal: Why is it important, though, that individual investors know about this? If I’ve got 20 shares of J. Crew, it’s really not that big of deal that the guy’s got a helicopter.
LEDER: If you have 20 shares of J. Crew, you probably don’t care about this, and you probably shouldn’t be paying attention to this. But if you have 1,000 shares or a significant position in J. Crew then this is something that you do want to pay attention to because it reflects often on the performance of a company.
Ryssdal: In the much larger sense, right?
LEDER: In the much larger sense, yeah. One has to ask the question if you look at the CEO of Abercrombie & Fitch, I mean, that stock was down 70-something percent last year. The CEO’s air-traffic usage, personal use of the corporate jet I should say, was up dramatically. It was up about 60 percent last year. Maybe he should be paying a little bit more attention on what’s going on at the stores, instead of flying around to wherever he’s flying around for personal use of the corporate jet.
Ryssdal: Well, where is the disclosure though? Is it really buried in the footnotes, and don’t the boards have an easier way to find out?
LEDER: Well, you would think that the board would have a chance to see this information, you know, at a board meeting. But yes, it is buried deeply in the footnotes. It’s often a footnote to something called the summary compensation table. And then from there there’s additional footnotes in there. So, it’s not something that you’re going to be doing on a casual Saturday, like, Hey, let me read through a proxy statement and read the footnotes.
Ryssdal: Unlike you, right?
LEDER: Unlike me who spends a little bit too much time reading the footnotes.
Ryssdal: Michelle Leder runs the Web site footnoted.org. She blogs at The New York Times as well. She’s got a Perks Watch column there. Michelle, thanks a lot.
LEDER: Thanks for having me, Kai.
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