For those of you who`ve always thought that executives view perquisites as their due, it appears the executives agree with you.
A study by the A.S. Hansen Inc. compensation consulting firm shows that 24 percent of executives believe perks are an ”integral part” of their compensation, while 41 consider them as ”entitlement.” Among Chicago-area executives, only 19 percent consider perks ”integral,” but 49 percent consider them ”entitlement.”
So what`s the difference? ”The subtlety there is that, if it`s an integral part, it`s just an accepted part of compensation,” explained Philip G. Henderson, Hansen senior vice president who worked on the survey.
”Entitlement relates to rank. You know, `I get stock options if I reach a certain level in the organization`. ”
More than 90 percent of the companies represented in the survey offer perks, but only 32 percent label the extras as ”important.”
The most obvious perk–company cars–were offered by 80 percent of the respondents, but usually were reserved for top management. Goodies such as lunch clubs and country clubs remain popular, although offered by a minority of companies. And one of the last great comforts–first class air travel
–appears to be a thing of the past. Nationally, 57 percent of the companies would pay only coach fares. In Chicago that number was 61 percent, the highest percentage in the nation, Henderson said.
But, frankly, the perks that caught our attention were less common and more exotic. Nationally, 15 percent of the companies provide security for executives. ”Among industry groups the highest users are utilities (31 percent), presumably defending their executives against the more active antinuclear demonstrators,” the survey concluded.
Henderson added: ”The higher your pay and the more visible your responsibility, the more important security becomes. There`s a lot of crazy people out there. I think home security is one perk we`re probably going to see increased. From talking to executives, I think it`s one they put a high value on, and they`ll negotiate it.”
We also liked maid and cleaning services (offered by 2 percent of the companies), full cost of living-quarters (3 percent), clothing allowances (1 percent) and use of the company yacht (1 percent).
However, with all this, companies believe they pay their executives an honest salary for an honest day`s work. Much more than half–in Chicago it was 62 percent–of the respondents said the company goal was to compensate executives at the market average for their industry. Less than a third–29 percent in Chicago–said they aimed at being above the average. Nationally, 84 percent said they wanted to be at or better than industry average on executive compensation.
”The cynical question is, how can 84 percent of the people be average or above?” Henderson laughed. ”If we interviewed them, they`d say, `We want to be above the market.` And then you go in and look at their actual pay practices, and there`s a big difference. It`s management perspective that always wants to communicate the best view toward the employee. The reality is always going to be something different.”
But he quickly added, ”That doesn`t mean they don`t believe it.”
TAX REFORM FOR RETAILERS?
It looks as if the legislature finally may act to simplify the labyrinth of sales and use taxes that Illinois retailers have to keep track of. Finding ways to streamline the tax system is the No. 1 priority of a committee that began work this week, said chairman Douglas Whitley.
Paul Vallas, executive director of the Illinois Economic and Fiscal Commission and a committee member, indicated last week that the group might focus more on state implica-
tions of federal tax law changes, with sales-tax issues being a secondary item. But, then, such issues are the crux of Vallas` job.
After the committee`s first meeting on Monday, Whitley, who heads the Taxpayers` Federation of Illinois, said Gov. James Thompson is most concerned about taming the unruly mess of state and local sales and use taxes.
Whitley makes a convincing case that those taxes are too confusing to handle. He can rattle off enough tax facts to confuse even the most tenacious of business reporters. Problems range from different tax treatment of services and products, to requiring merchants to figure out if they`re selling a
”component” or an ”accessory,” which carry different tax rates.
And to be sure everybody is confused, 101 localities in Illinois have authority to impose their own home-rule taxes, and about a dozen have done so. But the State Department of Revenue refuses to collect those home-rule taxes, forcing communities to set up their own agencies.
”We acknowledge that Illinois has the most complicated sales tax structure in the nation,” Whitley said. ”We also are one of only a handful of states that has any local collection of sales taxes.”
By the time the legislature gets to work in earnest in spring, Whitley said, the committee hopes to have suggestions to simplify the various systems. But, like Vallas, he did not discuss specific proposals.
Secondly, Whitely said, the group will look at state dependence on federal funds, ”specifically, what kind of federal money has come to Illinois in the past that we no longer expect to be there.”
”We speculate,” he added, ”that the federal government is going to make drastic changes in the next budget because of Gramm-Rudman.”
The question on the floor is not necessarily how the state can make up for the drop in federal funds, but whether the state should do so,” Whitley said. ”How many of these programs do we really want to maintain? I don`t think that every program the federal government decided to fund leaves an obligation for the state of Illinois to continue that funding.”
One possibility is to allow local governments to raise funds to pay for local programs. Another, of course, is to simply allow some programs to lapse if federal funds dry up.
”I don`t think we can expect the federal government just to pull out of everything they`ve been doing for local governments for many decades,”
Whitley added. ”I don`t want to see local governments crying wolf.”
But Whitley, Vallas and the legislators, retailers, county and city officials that make up the committee have another task, too: They have to figure out ways to raise more state revenues. It`ll be surprising if the committee`s recommendations don`t include an increase in state taxes, albeit perhaps as part of a simpler system
COMBINED MOVING TOWARD NEW NAME
The folks at Combined International Corp. aren`t just changing their building. They`re changing their name.
There`s $5,000 for the employee who comes up with the winning name. But to make sure all bases are covered Combined also has retained an outside consulting firm to help come up with an idea and ”assist with the identify change.” That job has gone to Anspach, Grossman & Portugal, the firm that brought you such monikers as ”Navistar” and ”Unisys.”
Stockholders will be asked to approve the winning entry in April.
The idea behind the change, according to Combined`s president and chief executive officer, Patrick G. Ryan, is to have a name that reflects all the parts. Combined originally had only one big subsidiary, Combined Insurance Company of America. But now that Combined has combined with all sorts of other companies–Ryan Insurance, Life of Virginia and Rollins Burdick Hunter–it wants a name that reflects those combinations.
Combined, which just sold its headquarters at 222 N. Dearborn St. to an Amsterdam-based investment company, is still moving into its new digs at 123 N. Wacker Dr.
