From the Pages of The Pomerantz Monitor: Relocation Subsidies: The Latest Corporate Giveaway

by Carolyn Moskowitz for Pomtalk.com, January 4th, 2011.

The Pomerantz Monitor reports on one of the latest issues angering shareholders — relocation subsidies. Reimbursement of relocation expenses is nothing new: if a company asks an employee to move, the least it can do is pay the costs incurred. But now we have relocation expenses on steroids. Some companies hiring new executives, or asking existing executives to relocate, are reimbursing them not only for the moving van, but also for any losses they incur when they sell their homes. In today’s market, that can be huge.

For example, according to the WSJ, when Microsoft recruited Stephen Elop as president of its business division in 2008, it paid him $5.5 million in relocation benefits, including $3.7 million to cover his losses on the sale of his home. When he later quit Microsoft in 2010, he got to keep his relocation bonus. In response to shareholder pressure, Microsoft has since put limits on its relocation packages, including a clawback that requires reimbursement of the company if the executive jumps ship within two years.

According to the WSJ, about 74% of companies reimburse some or all of employees’ home-sale loss if taking a job with the company forces the employee to move. Given the monumental housing losses some top honchos have taken, this has led to a shareholder mini-revolt at some companies. (continue reading… )

 

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