How to get rich after you quit your job

It was quite a retirement present. When Dame Marjorie Scardino stepped down as the chief executive of Pearson, she didn't depart from the publisher of the Financial Times with a gold-plated watch – she left with a £100,000 painting that had hung on the wall of her office. The painting of lilies by IvonHitchens, which the company had originally bought for £12,000 and is now valued at up to £100,000, is actually relatively mild as perks go, when compared to what Malcolm Brinded got when he departed from Shell, the oil major. When he relocated to the Netherlands, he bought a house for 3.4m (£2.9m).

After he quit, he put the house on the market, but no buyers emerged. So Shell bought it for 2.4m – an average of three independent valuations – and then compensated him for the loss in value of the house to the tune of 992,199. Another controversial perk has been handed to BAE Systems' US chief, Linda Hudson. She enjoys personal use of the corporate jet – at a cost of £66,300 to shareholders last year – on safety grounds. The private plane used by Petrofac's executives has also raised critical comment.


It is true that the company operates in far-flung and often dangerous places, making commercial travel impracticable. But leasing the jet from a company owned by the chief executive? Other more run-of-the-mill perks include the provision of financial and tax advice for senior executives, paid for by their employers, in addition to "tax equalisation" payments, a notable example of which was the £5.7m awarded to the former Barclays boss Bob Diamond upon his move back to the UK when he became group chief executive.

Relocation packages have also raised eyebrows, a notable example being the £800,000 advanced to the former HSBC chief executive Michael Geoghegan when he moved from London to Hong Kong. The Grin of the Fat Cat So far, the issue of perks, grants, payments, call them what you will, has flown under the radar compared with the issue of overall pay, the relentless rise of which has taken place against a backdrop of recession and poor stock performance. Perks, though, are increasingly beginning to make waves among the investment community. As one significant shareholder said: "We have noticed this as an issue that needs more engagement from us."

The shareholder is not concerned about use of private jets in certain cases or in relocation packages for executives, arguing that the latter are sometimes necessary to persuade executives to uproot their families. But they are uncomfortable over some of the other issues.

Robert Talbut, chief investment officer of Royal London Asset Management, the investment arm of Britain's biggest mutual insurer, also sees it as an issue: "It is legitimate to ask questions as to whether some of the perks we have seen are the best use of shareholder funds. Where we do see things we feel are inappropriate, we raise it as part of our engagement." Guy Jubb, global head of governance and stewardship at Standard Life Investments, said: "Over the last two to three years, we have seen the level of benefits, at certain companies, creeping up. As a result, we are engaging more with companies on this aspect of remuneration." Pirc, which advises some of Britain's biggest pension funds, makes the point that with remuneration packages continuing to creep up, some of the perks executives enjoy are becoming untenable.