John Tyson is a traveling man.
Tyson’s use of Tyson Foods’ corporate jet for personal travel cost the company $1.3 million in its fiscal year that ended in September. That ranked the chairman of the Springdale company No. 1 among executives at Arkansas’ publicly traded companies who used corporate jets for personal trips. It may have put him at the top of all executives in the S&P 500.
According to figures from the company’s proxy filings with the U.S. Securities & Exchange Commission, the $1.3 million is nearly 5 percent more than Tyson’s personal jet use cost the company in the previous year.
Tyson’s travel habits buck a recent trend among top corporate executives in Arkansas. Seven of the 13 top executives at the state’s publicly traded companies reported lower sums for their personal trips on corporate jets than they had the year before, according to proxy statements.
Arkansas Business reviewed proxy documents from 17 publicly traded companies based in Arkansas to report on those that offer executives the perk of using the company jet for personal trips.
The value of that benefit is listed as part of the executives’ compensation in annual proxy details.
The aircraft perk is one that draws scrutiny, and a number of companies have stopped offering the benefit, said Charles M. Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.
“It’s considered very problematic by the investment community,” he said. “The plane is for business purposes. It’s inappropriate to use corporate aircraft for personal purposes.”
But allowing executives to use corporate jets for personal travel is still popular among some companies.
Walmart Inc. of Bentonville said in its proxy filed in April 2017 that the retailer will allow its top executives to use one of the company’s jets for a “limited number of hours” every year.
“We provide these perquisites and supplemental benefits to attract talented executives to our company and to retain our current executives, and we believe their limited cost is outweighed by the benefits to our company,” the filing said.
Some corporate governance experts see the travel perk as a relatively minor matter for investors. Edward Rock, director of the Institute for Corporate Governance & Finance at the New York University School of Law, said he didn’t think that shareholders care much about executives’ personal use of corporate jets. “Ultimately, these are not material amounts for the firm’s bottom line,” he said. But disclosing the value of trips can be embarrassing, he said, making the perk less attractive.
Personal use of the company jet can also hurt company morale, Rock said. “If you were a sensible executive, you’d say, ‘Look … we don’t need this distraction.’ ”
Value of Perks Falls
The median value of aircraft perks for CEOs in the S&P 500 fell to about $95,000 in 2015 from more than $100,000 in the previous two years, according to a January 2017 report, the latest available, by Equilar Inc. of Redwood City, California, which collects information on executive pay.
In 2015, the highest disclosed value of an aircraft perk was $873,368 for Barry Diller, chairman of Expedia, according to Equilar. John Tyson was No. 2 with $818,462, followed by Mark Zuckerberg, chairman and CEO of Facebook, whose personal use of a company plane was valued at $775,011.
The value of Tyson’s use of the corporate aircraft was more than his base salary of $937,587 in fiscal 2017 and $928,818 in 2016.
After Tyson, the No. 2 executive in personal use of company aircraft was David Cheesewright, an executive vice president at Walmart Inc. and president and CEO of Walmart International. The retailer’s proxy references Cheesewright’s use of the corporate aircraft to travel from his home in Canada to Walmart’s headquarters in Bentonville. The value placed on his jet use for the fiscal year that ended in January 2017 was $225,624, up 20 percent from the previous year.
At No. 3 was Tyson Foods’ President and CEO Tom Hayes. His use of the corporate jet on personal journeys cost the company $220,000 for the fiscal year that ended in September.
He became CEO on Dec. 31, 2016.
Gary Mickelson, a spokesman for Tyson, said in an email to Arkansas Business that offering the aircraft perk hasn’t been a problem for the company.
“We offer this benefit to enhance the security and safety as well as optimize the efficiency of our key executives,” he wrote.
“It’s one element of the overall compensation and benefits package for our executives that is approved by the Board.”
Mickelson also said that more than 95 percent of the shareholder votes approved the compensation of its named executive officers at the company’s 2017 shareholders meeting.
The other Arkansas executives whose corporate jet use cost their companies $100,000 or more were Roger Jenkins, president and CEO of Murphy Oil Corp. of El Dorado, who listed $154,745 for 2016, up 30 percent from the previous year, and R. Andrew Clyde, president and CEO of Murphy USA Inc. of El Dorado, whose jet use was valued at $116,271, down 30 percent from the previous year.
The other 12 named executives cost their companies less than $100,000 for personal trips, relatively small amounts for companies generating billions of dollars in revenue.
‘They Get Paid a Lot’
Still, Elson, the director of the John L. Weinberg Center for Corporate Governance, said he thinks the executives should pay for their personal travel themselves. “They get paid a lot of money.”
Randy Hargrove, a spokesman for Walmart Inc., told Arkansas Business that the “limited use” by executives of the corporate jet “has not been a significant issue in our conversations with investors.”
Walmart has 15 planes registered with the Federal Aviation Administration. The company’s policy is to permit executives to use them only when they’re not being used for business purposes.
Flight hours for top Wal-Mart executives are approved by the board’s Compensation & Management Development Committee.
“We’re in northwest Arkansas, and there’s a limited number of direct flights” from the Northwest Arkansas Regional Airport, Hargrove said.
Not all of Arkansas’ publicly traded companies handle the aircraft perk the same way.
J.B. Hunt Transport Services Inc. of Lowell said in its proxy that its executives can use the company jet — it has a shared ownership with NetJets Inc. of Columbus, Ohio — “on a very limited basis” and for other managers “in the event of an emergency or other urgent situations.”
None of J.B. Hunt’s top executives used the corporate plane for personal reasons in the years covered by the two most recent proxy filings.
Murphy Oil allowed Jenkins to use up to 50 flight hours annually for personal travel in the continental United States as part of his compensation package as its top executive, according to the company’s proxy filing. In 2016, Jenkins used 48.2 hours for a value of $154,745. In 2015, Jenkins used 38 of the 50 flight hours, for a value of $118,820.
At Bank of the Ozarks in Little Rock, George Gleason, chairman and CEO, is the only executive authorized to personally use the bank’s plane.
“Due to the hours Mr. Gleason works and the constantly changing nature of his schedule and work demands, the board has deemed it prudent to provide this benefit,” spokeswoman Susan Blair said in an email to Arkansas Business.
She said that the value of the benefit has been less than 1 percent of his total compensation in each of the past two years. His total compensation in 2017 was $6.9 million.
“The Board believes that the enhancement to Mr. Gleason’s productivity more than offsets the cost of this benefit,” Blair said.
Executive Compensation: The Value of Personal Trips on Company Jets
|FY 2017||FY 2016|
|George G. Gleason
Chairman and CEO
Former Vice Chairman, Chief Lending Officer & President, Real Estate Specialties Group
|William Dillard II
|John W. Allison
|Roger W. Jenkins
President & CEO
|R. Andrew Clyde
President & CEO
Chairman of the Board
President & CEO
Group President, Fresh Meats & International
Former President, North American Operations
*Hayes succeeded Smith as CEO on Dec. 31, 2016
|C. Douglas McMillon
President & CEO
|M. Brett Biggs**
EVP & CFO
|Gregory S. Foran
|Charles M. Holley Jr.
Retired EVP & CFO
|Rosalind G. Brewer
Former EVP; President & CEO, Sam's Club
|Neil M. Ashe
Former EVP; President & CEO, Global eCommerce & Technology
** Promotion effective Jan. 1, 2016
# Hired September 2016
Source: Annual proxy reports on file with the U.S. Securities & Exchange Commission
Arkansas Public Company Corporate Jets
|N-Number*||Serial Number||Manufacturer Name and Model|
|Bank of the Ozarks|
|915BD||690||Gulfstream Aerospace G-V|
|916DD||520||Learjet Inc. 45|
|917BD||517||Learjet Inc. 45|
|Murphy Oil Corp.|
|360M||68||Dassault Falcon 2000EX|
|Murphy USA Inc.|
|Simmons First National Corp.|
|870AR||46||Dassault Aviation Falcon 2000|
|Tyson Foods Inc.|
|901TF||285||Dassault Aviation Mystere-Falcon 50|
|902TF||303||Dassault Aviation Mystere-Falcon 50|
|904TF||71||Dassault Falcon 2000EX|
|906TF||5366||Canadair LTD CL-600-2B16|
|15DP||680-0577||Textron Aviation Inc. 680|
|16CP||680-0567||Textron Aviation Inc. 680|
|170SW||9042||Bombardier Inc. BD-700-1A10|
|183CM||133||Learjet Inc. 45|
|209MD||2127||Learjet Inc. 45|
|2623H||3248||Engineering & Research Ercoupe 415-C|
|313BH||108||Learjet Inc. 45|
|403LS||2124||Learjet Inc. 45|
|455DG||129||Learjet Inc. 45|
|506KS||2055||Learjet Inc. 45|
|762MS||6008||Gulfstream Aerospace GVI (G650ER)|
|802AK||2128||Learjet Inc. 45|
|834AF||225||Learjet Inc. 31A|
|990WA||2122||Learjet Inc. 45|
|242MT||621||Gates Learjet Corp. 35A|
|Windstream Holdings Inc.|
|192W||560-5239||Cessna 560 XL|
|748W||560-5531||Cessna 560 XL#|
* N-Number is the aircraft’s U.S. registration number.
** Registered owner is BOTO LLC of Little Rock, a Bank of the Ozarks’ subsidiary.
# Registered owner is Windstream Leasing LLC of Little Rock.
Source: Federal Aviation Administration Registry