Arkansas Executive Use of Company Jets Rises in 2013

(Editor’s Note: A correction has been made to this article. See end of article for details.)

In 2013, personal travel increased on aircraft operated by Arkansas’ publicly traded companies.

Top executives at nine of Arkansas’ public companies valued their personal flights on company jets at a total of $2.4 million, according to proxy statements filed during 2014 with the U.S. Securities & Exchange Commission and compiled by Arkansas Business. For the previous year, the amount was $1.62 million. Arkansas Business reviewed proxy statements from 19 publicly traded companies based in Arkansas and reported on those that listed executives who received a value for their personal use of the company’s aircraft.

The shareholders who pay for the perk might grumble about the cost but usually don’t take action, said Paul Hodgson, a partner at the governance consulting firm BHJ Partners of Portland, Maine.

“It’s not a big enough number for [shareholders] to get as upset about as they would if bonuses were being paid out and people were being laid off and earnings were going down and revenues were negative,” he said.

The biggest user of the company aircraft perk in Arkansas was John Tyson, chairman of Tyson Foods Inc. of Springdale. The value of his personal use of corporate aircraft was listed at $1.03 million for the company’s fiscal year that ended last Sept. 28, which was more than his base salary of $804,000. (Bonuses and other awards brought Tyson’s compensation up to nearly $8 million for the fiscal year.)

In the previous fiscal year, he valued his flights on Tyson Foods’ corporate jet at $860,520. The distant No. 2 user of the company aircraft perk was Mike Duke, who retired Jan. 31 as CEO of Wal-Mart Stores Inc. of Bentonville. His personal flights last year were valued at $144,586, about 17 percent of John Tyson’s value.

A Tyson Foods’ spokesman declined to offer an explanation of why Tyson’s aircraft use was so much greater than any other executive in Arkansas.

“We report personal aircraft usage of all Tyson Foods executives in our proxy statement as required by the SEC,” Tyson Foods spokesman Worth Sparkman said in an email response to Arkansas Business. “John Tyson’s use is part of his compensation package and is in accordance with his employment contract.”

Allowing executives to use corporate jets for personal use has gained popularity during the past 15 years, said David Yermack, a corporate finance and corporate governance professor at Stern School of Business at New York University.

“It’s one of the many fringe benefits that are used to motivate and reward people,” Yermack said.

The median value of perquisites related to the personal uses of the company plane by Fortune 100 chief executives increased by 5.5 percent to $116,292 in 2012, according to the most recent figures available from Equilar Inc. of Redwood City, California, which collects information on executives’ pay.

Hodgson, of BHJ Partners, said he hasn’t heard of a good reason why a company should pay for an executive’s personal use of the corporate jet.

“I’ve heard plenty of defenses as to why they should fly on a corporate jet, because it’s more efficient and it takes less of their time and therefore they’re available for company business more,” Hodgson said. “But I haven’t heard any decent defense as to why they can’t pay for it themselves, given their level of compensation from other sources.”

(Our Weekly List: Click to buy the list of Arkansas largest aerospace companies.)

Handling the Jet’s Use

Not all of Arkansas’ publicly traded companies handle the aircraft perk the same way.

J.B. Hunt Transport Services Inc. of Lowell allows its executive officers to use the company’s jet “on a very limited basis,” and other managers can use it in the event of an emergency, according to its proxy statement.

Its proxy filings showed that none of J.B. Hunt’s top officers used the corporate plane for personal reasons in 2013 or 2012.

And Bank of the Ozarks Inc. of Little Rock recently changed its handling of the benefit.

In 2012, George Gleason, the CEO and chairman of the board of the bank holding company, used the company plane for personal travel, but he reimbursed the company at an hourly rate based on flight hours, which in 2012 totaled $90,637.

That changed, though, in 2013. The board’s compensation committee approved paying for Gleason and other executives to use the plane for personal reasons starting on Jan. 1, 2013. The value of the trips was declared as part of the executives’ compensation.

Bank of the Ozarks said in its proxy filing that by letting the executives have access to the corporate planes, they could return to the company quickly if needed.

Murphy Oil Corp. of El Dorado limits its CEO’s personal use of the company jet to 50 flight hours per year. According to its proxy statement, Murphy Oil said it offered the company plane to the CEO — that’s been Roger Jenkins since its spinoff of Murphy USA on Aug. 30, 2013 — as a perk to stay competitive.

David Schmidt, a senior consultant at the executive compensation firm James F. Reda & Associates in New York, said that in addition to helping companies stay competitive, access to the jet helps keep executives safe.

“It’s pretty common, especially in the larger companies, to have security aspects surrounding the CEO,” he said. “Many CEOs have home security systems. They have personal drivers, all these things to kind of wrap the CEO in a bit of a cocoon.”

Executive Compensation: The Value of Personal Trips on Company Jets

*Includes spousal travel to company or industry events and any related events. In general, executives aren’t allowed to use the corporate jet for personal trips. The exact amount for the personal trips on the company’s aircraft wasn’t listed in the proxy statements.

**The amount came from a company spokeswoman. For the 2014 proxy statement, the amount was for a trip Young and his wife took to a company event. The 2013 proxy statement refers to travel related to a company meeting and a board meeting.

*Held the position from June 2012 to August 2013
**Retired in 2012

*Spinoff of Murphy Oil Corp. effective August 2013

*For personal use of company-owned aircraft and an amount for event tickets

*CEO from 2009 to Jan. 31, 2014
**Promoted effective Feb. 1, 2014
#Resigned in August 2014

Source: Annual proxy reports on file with the U.S. Securities & Exchange Commission. Public companies in Arkansas not listed did not declare any personal use of corporate aircraft by executives.

(Correction: The original totals for ArcBest’s executive compensation didn’t take into account their use of other perks. The chart for Robert Young has been corrected.)