Bosses are cutting costs, just not the private jet

A slight majority of the 500 largest U.S. companies by revenue now pay for their CEOs to fly private, according to executive-data firm Equilar. While many of these companies are reducing head count and asking their remaining employees to do more with less, their collective spending on private air travel is 76.7% higher than in 2020.

Meta Platforms, which has gone through rounds of layoffs in recent years, paid $1.5 million to charter flights for Chief Executive Mark Zuckerberg last year. Zuckerberg owns a jet and bills his company when he uses it for business travel. I guess this is the C-suite version of you and me putting in for mileage reimbursements when we drive our own cars on work trips.

On top of $36 million in salary, bonus and stock awards last year, JPMorgan Chase threw in $293,753 of personal travel on a company jet for CEO Jamie Dimon. Personal use of corporate planes is an increasingly popular perk, and businesses tend to report the value of the benefit at less than market rate.

Executive perks in general have gotten less lavish as Americans developed a more populist sensibility after the financial crisis of the aughts. A lot of companies stopped picking up the tab for country-club memberships and curbed “gross up" payments, which make perks even sweeter by covering the taxes that accompany them.

But private air travel has survived—nay, soared—amid other cutbacks.

Safe in the sky

Corporate securities filings tout the relative modesty of executive benefits. Many underscore the absence of golden parachutes and Cadillac healthcare plans. Some companies don’t even provide Cadillacs anymore.

This is a response to public scrutiny of business leaders, who are often perceived as overpaid and out of touch. Ironically, criticism is the very thing that drives companies to spend more money flying execs around on private jets.

Charter flights are the surest way to keep CEOs safe from people who might act on their grievances.

“It’s a tough thing to hear for rank-and-file employees, but security is a big reason why spending has been so high," says Amit Batish, a senior director at Equilar. “Executives, especially high-profile ones, don’t want to travel publicly. To be competitive today, you’re going to have to shell out to keep them happy."

Batish and others who monitor private-jet usage point to last year’s killing of UnitedHealth CEO Brian Thompson as a wake-up call. Though it didn’t happen at an airport, the killing reinforced the importance of security measures, which increasingly include private air travel as a key component.

Even for executives who want to look like they are sharing employees’ sacrifice during leaner times, the jet is one thing they won’t compromise. Zuckerberg for years has drawn a $1 base salary, but his $27.2 million in other compensation last year included a $14 million allowance for security and about $2.6 million for personal use of a private jet.

Atlassian CEO Mike Cannon-Brookes wrote on LinkedIn this year that he feels a “deep internal conflict" about flying private, given his profile as a climate activist. But threats are “an unfortunate reality of my world," he explained.

Cannon-Brookes also contended his private-jet trips remove more carbon from the air than they emit, using direct air capture technology.

Rationalizing

Are we to believe that private air travel is all about saving lives and the planet?

The National Business Aviation Association provides talking points that companies can use to justify their use of private jets. Most center on reducing travel time and making executives more productive.

Those are valid reasons, but let’s be real: Pampering is a factor, too.

Some businesses turned to charter flights when commercial options were limited during the pandemic, says Gregg Brunson-Pitts, CEO of Advanced Aviation Team, a private-jet brokerage. Once you go private, it’s hard to go back.

Brunson-Pitts’s team caters to clients’ tastes with in-flight food from their favorite restaurants and “really nice swag bags."

“Think of, like, a cashmere blanket with your name stitched on it or some really comfortable slippers," he says.

A productivity boost, indeed.

Then there are companies like Starbucks, which pays for CEO Brian Niccol to commute via private jet from his home in Southern California to corporate headquarters in Seattle on a hybrid schedule. The cushy arrangement irks a lot of employees as the coffee chain is enforcing a return-to-office mandate, closing cafes and laying off workers, says Christine McHugh, a former Starbucks vice president.

Now an independent management consultant, McHugh maintains relationships within the company and is coaching some people who were recently laid off. She says using a private jet for business meetings is one thing, but “when it’s for your personal commute to and from the office, that seems over-the-top to me."

Starbucks didn’t respond to a request for comment.

On the balance sheets of multibillion-dollar companies, the cost of private aviation is a drop in the bucket of jet fuel. Reducing or eliminating charter flights isn’t likely to change major decisions like layoffs.

For frustrated workers, the issue is optics.

Jennifer Peters, who lives in the Atlanta area, has been looking for a new software job since being laid off in March. She has gotten through several rounds of interviews a few times, only to be told that hiring for those positions is frozen.

It’s hard to accept that a company can’t afford to hire her when her expected salary would be a fraction of the CEO’s private-jet budget.

“It makes me shake my fist because it’s a lot of hypocrisy," she says.

Businesses can rationalize private air travel all they want. That won’t stop it from being a bad look in the eyes of many.

Write to Callum Borchers at callum.borchers@wsj.com