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US corporate spending on jet travel has increased for the second consecutive year, demonstrating companies’ persistent investment in flying perks, even during the Covid-19 pandemic.
Last year, Jet spending for CEOs at S&P 500 companies reached $41.3mn, a 22% increase from the previous year, and the highest amount in at least a decade according to ISS Corporate Solutions.
Among S&P 500 companies, Meta, the parent company of Facebook, spent the most on CEO Mark Zuckerberg’s personal air travel, totaling $2.3mn. However, this amount was overshadowed by the $4mn spent on former COO Sheryl Sandberg.
Although criticism of corporate jet spending has diminished since the great financial crisis, the optics of extravagant corporate travel can still pose challenges for executives, according to Matteo Tonello, Managing Director at The Conference Board.
He stated, “With a growing debate about inequity, it can be a problem for a company if its leaders publicly display their privilege. Additionally, corporate air travel can conflict with a company’s efforts to reduce carbon emissions.”
As Covid-19 spread in 2020, companies expanded their use of private jets by justifying the increased spending as necessary to protect executives from contracting the virus. Throughout 2022, Covid-19 infections continued to impact Europe and the US.
However, some companies have since revised their Covid flight policies. Exelon, based in Chicago, discontinued expanded jet travel for executives and board directors in December. Regulatory disclosures indicate that the company’s jet spending increased from $667,435 in 2021 to over $1mn in 2022.
Insurance broker Arthur J Gallagher also reported a Covid flight policy in 2021 and 2022, but removed pandemic references from its regulatory filings this year. The company’s jet spending for CEO Pat Gallagher and another executive rose from $76,304 in the previous year to $446,111 in 2022.
Corporate spending on aircraft remained relatively stable from 2011 to 2019, according to Ramy Ibrahim at ICS. However, since 2019, S&P 500 companies have increased their jet spending by 40%.
Ibrahim commented, “It is reasonable to assume that the pandemic has influenced this increase.”
Last year, four companies, Meta, Lockheed Martin, Netflix, and Las Vegas Sands, spent over $1mn on private jet travel for their CEOs, compared to two in 2021.
Lockheed, a defense contractor, spent $1.3mn on flights for CEO James Taiclet, including commuting to his out-of-state residence and “deadhead” flights. The company spent $1.1mn on flights in 2021. Netflix and Las Vegas Sands saw increases of 129% and 46% in their jet spending, respectively.
In recent news, Netflix failed to gain majority shareholder support for its executives’ pay, following a 51% drop in the company’s share price in 2022. The company pointed to changes in CEO pay, including a $3mn salary cap.
Meta and Lockheed declined to comment beyond regulatory disclosures, while Exelon did not respond to inquiries. Securities and Exchange Commission rules generally require companies to report executive air travel as part of their compensation package.
Although shareholders typically overlook jet spending as a small portion of executive pay, excessive bills can create issues for companies. ISS highlighted Accenture’s significant jet spending for CEO Julie Sweet in 2022, which more than doubled from the previous year. Shareholder support for executive pay at the firm reached its lowest level since 2011. Accenture did not provide a comment.
Marian Macindoe, a corporate governance official at asset manager Parnassus, stated that the firm considers “excessive perks” when evaluating whether to vote against a company’s pay plan. She also mentioned that executives’ personal jet use often contradicts a company’s climate goals.
She explained, “We do not necessarily support a directive to return to pre-Covid levels of private flying because the use and benefits of private jets depend on the situation. However, reducing corporate jet usage can help decrease greenhouse gas emissions and support climate action goals.”
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