Home Personal Finance The Proxies: A Celebration of Substantial Business Benefits

The Proxies: A Celebration of Substantial Business Benefits

The Proxies: A Celebration of Substantial Business Benefits

The Relocation Man Award

Winner: Chris Smith, NeoGenomics

Chris Smith

When NeoGenomics, a loss-making cancer drug testing company in Florida, announced its new CEO Chris Smith in June last year, it set aside a handsome sum for his move: “Mr. Smith is also eligible for relocation allowances of up to $400,000 (plus any additional amount approved by the Compensation Committee).

Less than two months later, it casually tripled this figure: “The amendment provides … additional relocation benefits in the amount of $800,000.” So $1.2 million for the U-Haul.

How did the move go? Well, an update on ‘general and administrative’ expenses from February this year states: “$2.2 million in relocation expenses for our new Chief Executive Officer”.

NeoGenomics’ latest proxy submission sheds some light: “Mr. Smith was also entitled to a relocation allowance of up to $1.2 million, which was grossed up for tax purposes so that the economic benefit was the same as if such payment or benefits were provided on a non-taxable basis.

Curiously, the same document states, “We do not provide significant benefits or personal benefits to appointed executive officers. We offer competitive relocation benefits to newly hired officers, consistent with industry practices.”

A NeoGenomics spokesperson said, “All compensation-related decisions are reviewed by the Board’s Culture and Compensation Committee and finalized with the guidance of our compensation advisors.”

The ‘Wait, who’s the boss?’ Lucrative Lieutenancy Award

Winner: Sheryl Sandberg, Meta Platforms

Sheryl Sandberg © REUTERS

Sheryl Sandberg stepped down as chief operating officer of Facebook Meta last fall, after 14 years at the cradle of internet evil as Mark Zuckerberg’s runner-up.

The author of Lean In, it turns out, prefers to fly in it whenever possible, with higher aspirations than Zuck when it comes to using private jets. In 2022, while her boss collected approximately $2,281,172 in private jet expenses, Sandberg earned $4,357,484. In both cases, Meta partially justifies their jet use as a security measure. Whatever the reason, it’s a lot of flying: presumably Sandberg went on an overseas farewell tour while Zuck stayed home and got jacked.

The Gordon Gekko Company Ranch Award

Winner: W. M. “Rusty” Rush, Rush Company

Rusty Rush

In his widely used “Greed is good” speech, Gordon Gekko, protagonist of Wall Street (1987), denounced the excesses of “bureaucrats, with their steak lunches, their hunting and fishing trips, their corporate jets and golden parachutes”.

To WM “Rusty” Rush, boss of publicly traded truck dealer Rush Enterprises, Gekko’s warning read more like a blueprint. Rush Enterprises’ most recent proxy filing compensation notes include: “(e) the additional expense of personal use of the Company’s farm totaling $97,225; (f) the additional expense of personal use of the aircraft owned by from the company, $354,466 in total; (g) a mobile phone compensation totaling $1,800” as part of a $10 million total compensation package. When you consider the cost of cell phones, the farm seems almost reasonable.

[Further reading: Is this the world’s most pizza-addicted man?]

The Funhouse Mirror Compensation Prize

Winner: SmileDirectClub

David Katzman (why isn’t he smiling?)

Dental company SmileDirectClub marked the end of 2019 with a tech buzz, but it didn’t take long for people to start frowning. A month after going public, it was hit by allegations from shortseller Hindenberg Research (“Moving Fast and Breaking Things in People’s Mouths – 85% Downside”).

Hindenberg’s downturn turned out to be something of an underbite: Shares are down more than 97 percent since then, starting about 88 percent below the IPO price in 2022.

Line chart of SmileDirectClub's valuation has collapsed since IPO with Pout-rout

The effects haven’t been too detrimental to CEO David Katzman or his son, COO Steven Katzman, who received $6.2 million and $4.1 million respectively in compensation last year (admittedly, much of it through stock prices).

How are such remuneration decisions made? Well, funny you ask. From the latest proxy (our emphasis):

During 2021in connection with reviewing and approving NEO compensation for 2022, the committee reviewed a report from FW Cook benchmarking compensation for the NEOs and other executive officers, including peer group research and survey analysis… In selecting the peer group, the committee, with the assistance of FW Cook, approved a peer group which consisted of consumer-oriented, e-commerce, disruptive companies, of an average market capitalization of the previous year, generally between one-fifth and five times the company’s then-current market capitalization.

Here’s who they picked:

So, uh, in 2021, it looks like the committee (which includes both Katzmen, by the way) compared SDC’s 2021 market cap to those peers’ 2020 market caps. Right. This is all a bit vague, but just in case it’s interesting, here’s the (average) average size of those “peers” versus SDC’s own rating:

Line chart of SDC's valuation has never been close to the average of the companies it compares itself to ($ billion) with teeth gap

The standard FT chart style at least flatters SDC here.

[Further reading: Anatomy of an AIG payday]

The Bananas Split Award

Winner: Greg Maffei, Liberty Media

Greg Maffei © Bloomberg

Liberty Media’s website says it “recognizes that climate change and adverse impacts on the natural world are among the most pressing challenges facing humanity today.” It adds: “Environmental sustainability has implications for markets and our investors. In addition, how we manage our environmental impact matters to our employees, our customers, our business partners and our other stakeholders.”

Separately, CEO Greg Maffei earned $1,218,575 last year in airplane expenses. However, you may not be able to say this right away, because the spend is divided among four companies according to a service agreement: there is $42,948 with Liberty TripAdvisor, $272,567 with Liberty Broadband, $234,833 with Quarate Retail, and $668,227 with Liberty Media Corp.

[Further reading: Meet the bedding boss who really, really doesn’t want to live near HQ]

The Friend With Benefits Award

Winner: senior management of Live Nation


Looking at LiveNation’s 2022 compensation bills, it would be reasonable to be distracted by the $600,053 CEO Michael Rapino received for “personal safety,” or his $585,2459 airplane use, or his $75,000 “car allowance.” Or the free “ticket to a sporting event” he got.

Instead, we recommend looking at CFO Joe Berchtold, who received $38,585 in “tickets to certain sporting events.” Or perhaps encourage you to befriend General Counsel Michael Rowles, who received “$44,864 tickets to Live Nation events for certain friends and family members.” That’s, what, at least three tickets? Who says lawyers can’t be cool?

The International CosPlayboy Award

Winner: Ben Kohn, Playboy

Ben Kohn

A tragedy in fifteen words: “In April 2021 we bought a plane. The aircraft was subsequently sold in September 2022.” After operating as a private company for nearly a decade, Playboy (of “I read it for the articles” magazine fame) announced its return to the stock market in late 2020 through a spac deal. Naturally, the company took the opportunity to buy a plane, after all, a playboy has to keep up appearances.

Stock prices, it turns out, are going both ways, with stocks down 97 percent since their peak. So the company sold its plane. It’s a tragic story, one as old as time, but it didn’t stop boss Ben Kohn from raking in about $920,000 in airplane spending in that partial year.

The trustee says, “We believe that the use of our aircraft by our executives and directors was often more efficient and flexible than commercial travel, and better ensured confidentiality and privacy for our company.” Tldr: #worth it.

[Further reading: There’s a new high flier at JPMorgan]

The Dunce Proofing Award

Winner: Delek USA

Ezra Uzi Yemin, former boss of Delek

Delek US is a petroleum refinery. Read this: “Since tax year 2008, we reimburse our executives for the cost of professionally preparing their income tax returns. Because our executives are typically among our highest paid employees, their personal tax returns may be examined in connection with investigations of our tax returns. In addition, the reporting requirements of the Exchange Act expose executive compensation to public scrutiny. We believe that encouraging our executives to seek professional tax advice will reduce the personal risks associated with the increased scrutiny of their compensation, provide us with an executive retention and recruitment tool, and protect against the negative publicity that can surround an executive. incorrect statement by the official of his or her personal income tax obligations.

Considering former CEO Ezra Uzi Yemin received $12.4 million in total compensation last year — most of it in salary or stock — we think he can probably muster the cash for a personal accountant.

A Delek spokesperson said: “As with other Fortune 500 companies, we use independent compensation advisors to help us benchmark the compensation provided to senior executives. These benchmarks are used in determining the executive’s total direct compensation and are disclosed each year in our DEF 14A form, which is reviewed by proxy advisors.”

[Further reading: Oops!…I Forgot That I Paid My Sister Half a Million Dollars]

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