Wednesday, December 3, 2008

In Defense of Corporate Jets

The CEOs of the Big Three automakers were skewered in the popular press for their recent decision to fly to Washington DC on corporate jets to request bailout funds for their companies. While this type of story plays well in the media, it's not at all clear that offering this type of perk is unreasonable. Among other things, it provides a non-monetary incentive for managers to work harder in an effort to move up the corporate ladder. Here's a defense of the Big Three "jet scandal" from Time Magazine.

While I don't think the use of corporate jets is a real issue, it is somewhat worrisome that these three stooges didn't anticipate the public relations aspect of their decisions.


  1. The linked article mostly makes some useful points, but it veers a bit off course with this:

    "What's the point of achieving the big corner office, knifing all those people on your way to the top, if you don't have the ultimate travel ticket?"

    Seriously? Here's a rule of thumb I like to use: if a company's CEO only wants the job because of the jet, steer clear.

  2. In a discussion about this last week it was suggested by someone familiar with the private security business that traveling by corporate jet for executives in this case is not a matter of convince or being rewarded for having achieved a ceratin status. Rather, it's a matter of being able to provide adequate security and protection for CEOs who face higher risk of kidnapping.

    I would imagine the upcoming hybrid road-trip to DC will involve not one Ford Escape but a convoy for vehicles (all hybrids?) providing adequate security for the executives.

  3. The security argument is probably the biggest piece of nonsense I've heard in quite some time. I remember first reading that silly excuse about 10 years ago in a company's 10K, justifying a CEO's family's use of the jet...

  4. I completely agree that it's a more efficient use of the CEO's time to travel via jet rather than sit around in a commercial airport or endure a 20-hour round trip to DC by car.

    But more importantly, Ford, Chrysler, and GM should have the freedom to apportion their corporate resources as they please. Unfortunately, by accepting publicly-backed bailout dollars, they give the public the impression that citizens should have a say in how these companies operate. We saw the same thing a few weeks ago with the commotion over AIG's corporate retreat.

  5. Security? Are you kidding me? They are traveling along Interstate 76 across western Pennsylvania, not through downtown Tashkent. Somehow I don't see someone sticking a knife to their neck and dragging them into an unmarked van when they stop at the Quizno's outside Latrobe. We are talking about Rick Wagoner and Alan Mulally here, not Jimmy Hoffa.

    True, their time is valuable and, yes, flying commercial puts them at an unacceptable risk of delays. But when the price of one round-trip private flight is half a year's salary for someone about to get the ax, that's what you call an unnecessary expense.

    It's simply not a choice between idling on the runway at DTW or risking ransom. Take the car on a "red-eye" drive and sleep on the way. No one's time or money is wasted. I'm sorry, but when you say you don't have enough money and need mine, the corporate flight can take a back seat. Otherwise, we have reason to believe they might not be good stewards of the public's limited money which they are so boldly seeking.