Colgate Executives Get Thousands for Perks
Colgate Executives Get $11,500 a Year for Pet
Sitters, Karate Lessons, Other Perks
YORK Dec 8, 2004
Colgate-Palmolive Co., which announced Tuesday it is eliminating
4,400 jobs, disclosed in a regulatory filing that many of its top
executives and officers are given allowances of up to $11,500 a year to
spend on anything from pet sitters to running shoes to karate lessons
to movie rentals.
The plan, called "Above and Beyond," was detailed in the
consumer product company's quarterly filing in November with the
Securities and Exchange Commission. The program has been in place since
1986 and covers 800 executives.
Under the plan, executives and officers can ask for
reimbursement for exercise equipment, such as rowing or skiing
machines, instructional videos, grooming and boarding services for
pets, pet walking services and sitters, and veterinarian fees and
Twenty top officers are each eligible for an $11,500 yearly
allowance. Between 110 and 120 vice presidents are eligible for $10,000
allowances and 650 executives are eligible for allowances of either
$2,000 or $4,000, depending on their rank. Not every eligible executive
uses their allowance, the company said.
The Associated Press came across the program while searching SEC
filings from thousands of companies for information about compensation
for the use of personal trainers and other perks. Few companies
detailed programs as extensive as that of Colgate. A story was prepared
on Monday, before the corporate restructuring was announced, but the AP
held it for a day while waiting for the company's response.
"Colgate has consistently tried to be fair and very modest in
this distribution of any perquisites," said a company spokesman who
asked not to be named. "A total of 800 people in the 'Above and Beyond'
program have access to a modest, fixed stipend that can be used for
home computers, baby sitters, fitness training, tax assistance and
other benefits that can make their lives somewhat easier."
The plan replaced previous benefits that were unfairly
distributed and, in some cases, excessive, the spokesman said. "This
perquisite program, by design, puts Colgate well below the median for
perquisite programs among a very large comparative group," he said.
Colgate, which makes Colgate toothpaste, Softsoap and Ajax
cleaner, said it is cutting 12 percent of its work force and closing
one third of its factories to improve profits by reducing manufacturing.
The company had $9.9 billion in sales last year and paid its top
five executives $23.3 million in cash and stock, plus another $9.1
million in stock options. The company's highest paid executive,
chairman and CEO Reuben Mark, made $10.4 million in salary, bonus and
Some other expenses covered by the "Above and Beyond" plan,
according to the SEC filing:
Equipment and special clothes for fishing, boating, hiking,
golf, running and yoga; music, golf, tennis and self-defense lessons;
opera, ballet, museum, concert and sporting event tickets for the
executive and the executive's immediate family; movie tickets and video
purchases or rentals
Membership for tennis, swimming, racquetball clubs or local
YMCA-YWCAs and fitness centers. The company will also pay locker fees,
court rentals and personal trainer fees.
Housekeeping, house painting, snow removal, swimming pool care,
landscaping, gutter cleaning and chimney sweeping bills are covered
because "routine household chores can consume precious personal and
family time," according to the filing.
"To recognize the long hours spent in the office required by the
responsibilities of your position," the plan covers personally selected
artwork and desk accessories for the office, but executives are
responsible for insuring those purchases.
Procter & Gamble is confident of continued strong growth,
Colgate-Palmolive plans to close a third of its factories in the next
<> Procter & Gamble used a presentation for investors
Thursday to champion its recent performance, in sharp contrast to a
gathering held this week by Colgate-Palmolive, which announced it was
regrouping after disappointing results.
<>NY TIMES NEWS SERVICE Dec 11, 2004
But beneath the surface the two companies share some
similarities, both in the challenges they are confronting in the
consumer products industry and the strategies they are using to
Alan Lafley, Procter's chairman and chief executive, who has led
the company's turnaround since taking the helm four years ago, said
that his plan emphasizing "balanced growth" continues to work.
"We're confident we have the strategies, brands, innovation
pipeline and new market opportunities to sustain strong growth," he
But even with top-line success, Procter said operating profit
margins were expected to improve only "modestly," and it did not raise
its quarterly or annual earnings goals.
Rising commodity costs led the company, meanwhile, to raise the
price of some Folgers coffee products by 14 percent on Thursday. It has
also raised prices about 5 percent on some tissue and pet food goods
"We have made tough interventions that are needed to restore the
health of our business," said Clayton Daley, Procter's chief financial
officer, who did not rule out increases on more products.
Earlier in the week, Reuben Mark, Colgate's chairman and chief
executive, expressed a similar determination to take action amid the
sobering news of a sweeping reorganization.
During a conference call with investors on Tuesday, he said
Colgate would close about one-third of its 78 factories and eliminate
12 percent of its work force worldwide over the next four years. The
changes should help Colgate improve its profitability, and he said the
company would devote much of the cost savings to increasing sales.
Investors appeared to like what both companies said. Shares of
Procter climbed US$1.35, or 2.45 percent, on Thursday to US$56.38,
while Colgate rose US$0.70, or 1.4 percent, to US$50.25.
The consumer products industry is entering a challenging period,
however, and analysts say no company is immune. Price pressure is
growing as retail giants like Wal-Mart push for low prices and carry
cheaper private-label brands. Rising commodity prices add to production
costs. On top of that, intense competition is causing companies to
spend more on advertising just to retain the market share they already
"The market doesn't fully appreciate the challenges ahead," said
William Steele, a household goods analyst for Banc of America
"Companies like to tap you on the shoulder before they slap you
in the face, and Unilever and Colgate were tapping people on the
shoulder when they issued profit warnings this fall," Steele said.
Even with its recent success, he said, Procter has been
sacrificing some profit margin to maintain strong top-line growth.
Having improved their balance sheets and operations, the road
ahead for Colgate and Procter is very much the same: trying to drive
revenue growth by introducing innovative products and capturing new
customers, particularly those in fast-growing markets like China, Latin
America and Eastern Europe.