(Bloomberg) — General Electric Co. has helped Chief Executive Officer Jeffrey Immelt amass $22 million of life insurance coverage that one day could help his heirs cover the tax bill for his estate.
GE paid $314,511 last year for Immelt's two life insurance plans, the most for a CEO in the Standard & Poor's 100 Index, according to data compiled by Bloomberg.
GE is one of a shrinking number of companies offering life insurance coverage designed exclusively for top managers. On the lower end, JPMorgan Chase & Co. and Apple Inc. spent $101 and $2,520, respectively, on policies for CEOs Jamie Dimon and Tim Cook.
While many boards have scaled back executive perquisites after increased disclosure requirements and heightened scrutiny of pay practices, life insurance benefits — a ubiquitous part of estate planning for high-earning Americans because of the tax advantages — have received little attention.
Life insurance expenses are often lumped together with "an array of deferred compensation-related items, making it hard for investors to parse the details," said Michael Pryce-Jones, director of corporate governance at CtW Investment Group, which advocates for pension funds that collectively manage $250 billion. "I don't think it's on the radar for shareholders in the way it should be."
Universal Life
Executive insurance policies are reserved for a limited group of top leaders, a review of proxy filings shows. Last year, at least 10 companies in the S&P 100 Index offered their CEOs universal, or permanent, policies typically designed to last the insured's lifetime. Some of the annual premiums go into investment accounts that can grow tax-free.
Immelt's coverage includes two universal life insurance policies. One will pay two times his annual salary and bonus, which totaled $9.2 million last year, and the other provides a $3 million death benefit that's grown 4 percent annually since he first enrolled, according to Fairfield, Connecticut-based GE's most-recent proxy filing. GE, the world's largest maker of jet engines and gas turbines, has spent more than $1.43 million on premiums for Immelt since he became CEO in 2001, according to data compiled by Bloomberg.
3M Co. paid $286,115 in premiums last year for CEO Inge Thulin's executive life insurance, which has a death benefit of about $10.4 million, according to a proxy filing. Exxon Mobil Corp.'s Rex Tillerson and Honeywell International Inc.'s David Cote have accumulated benefits worth $11.5 million and $10 million in their executive life insurance plans, respectively.
"We provide our named executives with additional benefits that we believe are reasonable, competitive and consistent with the company's overall executive compensation program," Dominic McMullan, a spokesman for GE, said in an e-mailed statement.
Spokesmen for 3M, Exxon and Honeywell declined to comment.
Dimon's Plan
Of the 51 companies in the S&P 100 that disclosed expenses for CEO life insurance premiums last year, JPMorgan spent the least. Dimon's plan, which provides a maximum coverage of $100,000, is available to all benefit-eligible employees, according to a filing.
"Our compensation philosophy is to have a transparent and fair compensation program for senior executives with no special insurance, health or medical benefits," Joseph Evangelisti, a spokesman for the largest U.S. bank, wrote in an e-mail. "The board thought this was the most fair way to do it."
Apple offers Cook the same insurance that's available to all employees. Fred Sainz, an Apple spokesman, declined to comment beyond its proxy filing.
Companies must report perks given to any named executive officer if the annual aggregate value exceeds $10,000. Specific dollar amounts must be disclosed for all benefits that make up more than 10 percent of that sum or are worth more than $25,000.
