Despite all the talk of restraint and cost cutting, there were actually more CEOs with club membership fee benefits in 2008/2009 than in 2007/2008, according to a study just released by The Corporate Library. (2010 Proxy Season Foresights #7: Club Membership Benefits Holding Steady) Key findings:
- Club memberships were provided to 382 CEOs in 2008/9 and 372 CEOs in 2007/8.
- Median and average increases in cost of club memberships were 3.71 percent and 65.85 percent, respectively.
- Median and average costs of club membership perks in 2008/9 were $6,399 and $10,653, respectively.
- Only 43 CEOs in the S&P 500 (8.6 percent) received club memberships, representing only just over 10 percent of all CEOs receiving the perk.
- Although financial services companies account for only 12.6 percent of the study sample, CEOs at these companies make up over a quarter of the group receiving this benefit, some 97 of them.
- Club membership perks show no sign of decline, though provision is shifting.
- Best practice would dictate either that executives reimburse the company for personal use of country clubs or cover the cost of membership themselves and seek reimbursement as for ordinary business expenses. Numerous examples of this best practice exist.
- Shareholders should be wary of boards that continue to pay for club memberships, particularly if this is part of a wider pattern of excessive perquisite provision.
- Shareholders should be particularly wary of the provision of club memberships at financial services companies that must comply with TARP pay regulations while in debt to the Treasury.