SECTION 5. PROTECTION FROM UNFAIR RESTRICTION OF KEY SUBSIDIES (P.U.R.K.S.)
WHEREAS financial and non-financial benefits are a necessary lubricant for the engine of capitalism;
WHEREAS cash salary and stock-based compensation alone can't retain top-flight executive management;
Therefore, the purpose of this section is to prohibit the unlawful restriction of perquisites.
To fully appreciate the positive effects of CEO perks on productivity and shareholder value, just climb down the corporate ladder a few rungs and look at the case of an executive at Aaron Rents
Who are the drivers being developed? Ken and Brett Butler, the sons of Bill Butler, director and president of the company's sales and lease ownership division. Aaron Rents estimates that it paid $890,000 in 2005 to train the Butler boys and nearly $1 million on the program in 2006. Not a bad gig when you consider that their dad made only $597,000 in 2005.
Now, those who don't fully appreciate America's capitalist system might be outraged by a perk like this. On the contrary, The Motley Fool believes such perks are a necessary and healthy part of capitalism. That's why The Motley Fool stands in full support of Section 5, the P.U.R.K.S. provision, of H.R. 401.
The Butler(s) did it
Consider for a moment what would happen if Mr. Butler had been required to pay out of his own pocket for his sons' driving classes. Butler's salary is much too small to cover the price tag for his sons' crucial training. As a result, he would have needed to take out a sizable loan -- a loan that would likely weigh heavily on his mind. By taking care of this expense, Aaron Rents affords itself a more focused and capable executive without adding one red cent to Butler's salary.
Some people may regard The Aaron Rents Driver Development Program as an inefficient use of capital. On the contrary, TARDDP is a profitable perk for everyone. Consider this: In 2006, Ken Butler racked up numerous top-five and top-10 finishes in the USAR Hooters Pro Cup Series AND claimed the Most Popular Driver Award.
That popularity wasn't overlooked on Wall Street, where shares of Aaron Rents raced to an all-time high. Combine that rising stock price with the brand exposure from the Butler boys, and the result is a booming bottom line for Aaron Rents -- a bottom line that benefited shareholders, non-shareholders, owners, and renters.
Perk up, naysayers
Unfortunately, in the wake of recently reported corporate "excesses," perks have somehow gotten a bit of a black eye. But capitalism is nothing without incentives, and perks are merely special incentives -- very special incentives. Perks reward the creative class and pave the road for future wealth creation. After all, what's more important? That Aaron Rents spends money on a driver-development program for the Butler boys, or that Bill Butler drives the company toward accelerating growth and even greater shareholder value?
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Continue to our commentary on the next section of H.R. 401!