Administration March 7, 2001

Fat Relocation Packages for Fat Cats

July 3, 2001 (PLANSPONSOR.com) -It is often assumed that most relocation packages are given to new hires, but a recent study shows that more than half of the top 50 corporate relocation packages went to senior executives inside the organizations.
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The study of 363 companies, by human resources consultant, Towers Perrin shows that:

  • the average cost of the top 50 corporate relocation packages in the study was $452,168,
  • while the average cost of all the packages measured was $128,663.

A large percentage of the top relocation packages are for moves to expensive geographic markets in the world, such as New York City metropolitan area, the San Francisco Bay area, London and Hong Kong.

In addition, the study found that tax gross-ups can often comprise 40% to 60% of a package and are estimated to make up 30% to 50% of the total value of the relocation packages in the study.

While the study showed that the size of the package had little to do with the revenue size of the company and the industry type, the packages for the highest level executives comprise a disproportionately high number of the largest relocation packages.

Debt Forgiveness

Four of the top 50 relocation packages formed part of severance agreements made with departing senior executives from one company, where debts were written off as part of their agreements.

Even with these four packages removed from the top 50, the number of top packages that went to insiders exceeded those going to new hires by a margin of 52% to 48%.

The study was based on the analysis of proxy statements between 1998 and 2000, which typically include information on relocation costs

– Camilla Klein                      editors@plansponsor.com

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