Business

BOSTON — For some executives, corporate perks are getting just a little less exciting.

A number of major US companies are cutting back on glamorous luxuries like personal jet use, country-club memberships, and luxury rentals, recent corporate filings show.  Often the shifts follow pressure from shareholders, who in recent years have criticised soaring executive pay and over-the-top perks. 

But it doesn't mean that the "extras" package that comes with a C-suite job is in decline — in many cases the surging value of  more mundane freebies like financial planning assistance or life insurance is more than making up the difference.

"Companies are really digging in on identifying what areas it makes sense to focus their benefits programmes," said Robert Newbury, director at pay consulting firm Towers Watson. "You will see companies spend less on areas that raise red flags with investors."

Take for instance casino mogul Steve Wynn. He began paying out of his own pocket in November for his Las Vegas luxury villa after years during which his company Wynn Resorts Ltd. took care of the bill — which was more than $450,000 a year.

"The new treatment of Mr. Wynn's villa is part of an overall change of executive compensation to ensure the company is aligned with best-in-market compensation practices," Wynn Resorts spokesman Michael Weaver said.

At the same time, Wynn — who in December was featured on a "Truly Outrageous CEO Perks" list produced by the financial news service 24/7 Wall St because of the villa freebie — saw a company contribution to his insurance and benefits nearly double to $33,293 in 2013 from $18,125 in 2012.  

And he got "merchandise discounts" of $56,196, more than double the $23,057 he received in 2012. The filing did not give more details about what these discounts were for and Weaver declined to comment.

For AT&T Chief Executive Officer (CEO) Randall Stephenson the value of his "other compensation" — costs outside of traditional areas like salaries, bonuses and equity awards — dropped 35 per cent in 2013 to $522,203, according to its proxy filed last month. The drop was mainly because he now reimburses the company for personal use of AT&T aircraft, a spokesman said.

The policy is one of several that AT&T adopted to show "its commitment to paying for performance and aligning executive pay with stockholder interests," the company said in a filing reporting the change in March 2013. 

The telecom giant has been slowly cracking down on perks in recent years — from 2011 onwards it stopped paying fees for executives' country club memberships.

A decline in flying costs could also be seen at Facebook. CEO Mark Zuckerberg's cost for personal use of company aircraft was $650,164 last year, down almost half from $1.2 million in 2012. The aircraft were "chartered in connection with Mr. Zuckerberg's overall security programme", Facebook said in a filing, which did not give a reason for the decline. The company declined to comment.

Curtains open 

The changes are in line with broader trends in compensation, experts say. 

Towers Watson, for example, found just 36 per cent of Fortune 500 CEOs got company aircraft for personal use in 2012, down from 53 per cent in 2007. However, the median value for the personal use of aircraft among those who had the perk was $125,473 in 2012, up from $92,596 in 2007 — likely due to factors like higher fuel prices.

"You would have to say this is one of the real successes of the critics of executive pay," said pay consultant Alan Johnson. "They opened the curtains and everyone said, 'Oh my God, why we paying for all this?'"

Banks in particular have backed away from perks that brought them heat from lawmakers and regulators as they got bailouts during the financial crisis. 

Morgan Stanley Inc. paid $368,675 for then-CEO John Mack's personal use of company aircraft in 2008. But since then, Mack and his successor James Gorman paid out of their own pockets for such flights.

Another Morgan Stanley executive, wealth-management head Gregory Fleming, has received no perks since 2011, a recent filing shows. Fleming  worked at Merrill Lynch until 2009, around the time then Merrill CEO John Thain was criticised for a lavish office renovation that included a $35,000 "commode on legs”.

"Greg having lived through the John Thain era I think that continues to be paramount in everybody's mind," said one bank executive close to Fleming. 

Fleming declined to comment.

Still, cutting some of the flashier perks can be more symbolic than anything. Overall executive compensation continued to rise in 2013, though at a slower pace than in previous years, according to a review of early filings. 

Wynn, for example, made $19.6 million in compensation in 2013, up from $17.7 million in 2012. 

Mundane spending up

Indeed, about 60 per cent of companies that have filed disclosures for 2013 actually raised "other compensation" spending, according to compensation data firm Equilar. The trend follows the pattern of past years and may reflect more spending on areas like security and financial planning.

Towers Watson's survey last year found the median value of financial and tax planning assistance for CEOs rose to $15,000 in 2012 from $11,180 in 2007, for instance. 

And not everyone is booking less personal travel to their companies.

At Verizon Communications Inc. CEO Lowell McAdam got a 46 per cent boost in "other compensation" to $780,874 in 2013. Of that $120,304 was for personal use of company aircraft, up from $89,467 in 2012. Verizon declined to comment.

Nutrition and weight-loss company Herbalife also sharply boosted spending on personal jet use by its CEO Michael Johnson and his family. A company spokesman said the use of a private jet was for the family's personal security. 

Johnson and Herbalife have been under a lot of pressure from hedge fund manager William Ackman, who has had a big short bet against the company's shares and has accused it publicly of running a pyramid scheme. Herbalife strenuously denies the charge.

Another perk is the chance to use a company's products.

General Electric Co. described a programme that provides its home appliances "upon request" to top executives and directors. Rival Whirlpool Corp's filing outlined a similar deal for its directors who aren't executives. 

"For evaluative purposes, Whirlpool permits non-employee directors to test Whirlpool products for home use," the company said in a filing.

Also, California chipmaker Advanced Micro Devices Inc.  listed as gifts to its top executives the costs of Sony PlayStation 4 and Microsoft Xbox One game consol systems — with $1,006 worth logged to CEO Rory Read. 

Both systems use AMD components. Hundreds of other company employees also received game consoles "to acknowledge their contributions driving our strong financial performance," AMD spokesman Drew Prairie said via e-mail.

AMMAN — Aqaba Special Economic Zone Authority (ASEZA) announced in  a press statement on Thursday that it sponsored the Global Trade Development Week, APAC 2014 held in Kuala Lumpur, Malaysia last week with the aim of attracting  foreign investments and highlighting Aqaba's competitiveness.

ASEZA Chief Commissioner Kamel Mahadin briefed participants on Aqaba’s competitive investment climate and highlighted the port city's vision, achievements and opportunities.

“ASEZA is determined to market Aqaba in the Far East,” the statement quoted Mahadin as saying, noting that such move falls within His Majesty King Abdullah's drive to promote Jordan and Aqaba as investment destination.

He underlined the success Aqaba’s success as it attracting over $20 billion of investments. On the sidelines of the event, Mahadin discussed with Fahad Al Kaabi, chief executive officer of Manateq, a Qatari-based  Economic Zones Company, means to develop mutual cooperation and exchange of knowledge and know-how.

ASEZA head extended an invitation to the Qatari delegation to visit Aqaba and explore investment opportunities.

The Jordanian delegation agreed with their counterparts from the Iskandar Economic Zone Authority in Malaysia, to develop their cooperation and to facilitate transporation of Malaysian pilgrims to Mecca in Saudi Arabia via Aqaba. 

LONDON — Global private equity firm KKR  has bought $150 million worth of shipping loans from two European banks amid a surge of interest in the industry as world trade in goods picks up along with the global economy.

There have been a flurry of deals in recent months for ship finance loans, many of which are being put up for sale by banks under pressure to boost their capital in order to adhere to new, stricter industry legislation born of the financial crisis.

The banks have suffered alongside the shipping firms they lent to, as the latter endured one of their worst downturns in decades. Many firms defaulted on loans and several collapsed. As a result, the banks are offloading what they see as risky assets at cheap prices, even as trading conditions improve.

KKR picked up loans taken out by Indonesian oil and gas shipping group PT Berlian Laju Tanker that were sold by Sweden's Nordea Bank and France's BNP Paribas, trade finance sources with knowledge of the matter said.

KKR, Nordea Bank and BNP Paribas all declined to comment, while Berlian Laju did not respond to requests for comment. 

Pricing on the deal was in the region of 70 per cent of the value of the loans, the sources said.

A survey by accountancy and advisory firm Moore Stephens last week showed shipping confidence in February reached its highest level since 2008, while respondents indicated growing interest from private equity investors.

"Through buying shipping loans at a discount, investors are entering at a lower threshold. The freight market right now is okay, so companies will likely be able to service loans, thus funds make their 5 per cent, which is a nice carrying yield," one trade finance source said.

"If market goes up, their loans will appreciate, thus there will be additional benefit and return. If the market goes to hell or they think they can find a better management team, then they just take over the vessels and become shareholders and own the business,"  he added. 

KKR said in August it had formed a specialty finance company to lend to the maritime industry that would "originate, structure, underwrite, invest in and distribute debt financings secured by high-quality maritime assets". Maritime Finance would be capitalised with $580 million of equity, KKR said then.

Berlian Laju, which narrowly escaped bankruptcy last year, said in January it had cut its fleet size by 44 per cent and would transfer a stake in subsidiary PT Buana Listya Tama to one of its creditors Deutsche Bank. 

The shipping firm, which had struggled with weak freight rates and escalating fuel costs, reached a deal with creditors in March last year to restructure its $1.9 billion debt. 

Thomson Reuters LPC data showed Berlian Laju unit Gold Bridge Shipping Corp. took out a $685 million syndicated loan in 2011 in which Berlian Laju was an additional borrower on the facility. Lenders included Nordea Bank and BNP Paribas. 

Lloyds sale

Trade finance and banking sources said separately that Lloyds Banking Group had received multiple expressions of interest for a $500 million tranche of shipping loans and was reviewing the offers.

Lloyds declined to comment.

One trade source with knowledge of the matter said KKR was among those interested in the sale. KKR declined to comment.

"Every man and his dog is looking at this portfolio, it's very competitive," one banking source remarked.

Other contenders included Citigroup and Bank of America as well as private equity group Apollo Global Management and asset manager Oaktree Capital Management, trade finance sources noted.

Citi, Bank of America, Oaktree and Apollo all declined to comment.

The sale is likely to be the final large divestment of loans from Lloyds' ship finance portfolio which was worth around £7 billion ($11.64 billion) at its peak.

Lloyds' British rival Royal Bank of Scotland (RBS) and Germany's Commerzbank CBKG.DE and HSH are also selling shipping loans to investors including private equity funds in order to strengthen their balance sheets and divest assets that have hurt them during the market downturn.

RBS said in February impairments on its shipping loans soared to 341 million last year, of which £310 million was in the fourth quarter. Its shipping assets were worth £6.5 billion at the end of 2013, down from 7.6 billion a year earlier, RBS said.

AMMAN — The ready-made clothing industry topped the list of  exports in terms of value in 2013, marking a 10 per cent increase compared with the previous year, according to the Department of Statistics. In a statement, the department noted that JD810 million was generated in the exports of clothes last year, compared with JD737 million in 2012. Dina Fakhouri, president of the Jordanian Society for the Export of Clothes and Textiles, said the "high" quality and "competitive" prices of national-made clothes have contributed to boosting the sector, which she noted provides more than 40,000 job opportunities and supports other industries. Fakhouri indicated that the exports of clothes have increased to North America, noting that the added value of the Kingdom's clothing sector stands at 37 per cent

AMMAN –– Awni Rushoud, Jordan Investment Board’s (JIB) acting chief executive officer, on Wednesday briefed a delegation from the Australia Arab Chamber of Commerce and Industry (AACCI) on investment opportunities in Jordan, particularly in the fields of medical services, tourism and food processing. According to a JIB statement, Rushoud said Jordan’s strategic location, security and stability as well as business legislation are key investment attractions. He also highlighted that human resources in Jordan are considered among the most qualified in the region. The statement said JIB and AACCI will sign a memorandum of understanding to boost economic and business ties that aim to attract investments from Australia. The delegation was headed by Geoff Puttick, the chamber’s chairman and AACCI Director Ayed Wahab, the statement added. 

SINGAPORE — The Asia-Pacific will overtake Europe as the region whose tourists spend the most money overseas within 10 years, a report said Wednesday, driven by an explosion in the number of Chinese travellers.

Spending by tourists from the Asia-Pacific will reach nearly $753 billion by 2023, increasing the region's share of global spend to 40 per cent from 25 per cent in 2012, according to a report commissioned by travel technology firm Amadeus.

Travellers from Europe will account for 34 per cent of global outbound spend by the same year, down from 45 per cent in 2012, the report indicated.

"The findings underscore what most of us already intuitively know — that we have now truly arrived in the Asian century," Amadeus Asia Pacific President Angel Gallego said in a statement.

"No matter where we look, Asian travellers have and will continue to change the landscape of travel, and business must adapt to them or risk falling behind," he added.

In January, the state-run China Daily said Chinese travellers spent $102 billion overseas in 2012, making them the world's biggest spenders ahead of German and US tourists.

They are almost certain to have surpassed that record last year, noted the report.

Visitor flows from Asia over the next decade is forecast to grow at an annual average rate of 15 per cent — nearly double the preceding 10-year period and faster than any other region, said the report written for Amadeus by forecasting firm Oxford Economics.

Driving this expansion is the explosive growth in the number of travellers from China, the report showed.

The Asian economic powerhouse is set to surpass the United States this year as the world's largest source of outbound travellers and is poised to become the biggest domestic travel market globally by 2017, it said.

China's share of global outbound travel is projected to reach 20 per cent by 2023 — up from just 1 per cent in 2005.

China's economy has boomed over the past decade, expanding the ranks of its middle-class who are hungry for foreign travel after the country's decades of isolation in the last century.

European Union and Asian countries have moved to ease visa application procedures for Chinese tourists in recent years, keen to cash in on their big-spending habits.

The report also predicted that global travel would expand 5.4 per cent per year in the next decade, faster than the projected growth of 3.4 per cent for world gross domestic product in the same period.

Business travel, which was hit by the global financial crisis that started in late 2008, is also expected to bounce back.

Asia will account for 55 per cent of global business travel growth during the forecast period, the report indicated.

TOKYO — Prices rose across Japan Tuesday as a controversial sales tax rise came into effect, with everything from beer to washing machines costing more, sparking fears a drop in consumer spending will derail a nascent economic recovery.

Tokyo hiked the levy to 8 per cent from 5 per cent as it looks to control a public debt mountain, but corporate Japan's concerns were highlighted by a closely watched survey of business sentiment showing bosses are cautious about the future.

In a country beset by years of deflation, critics warn that already thrifty consumers would snap their wallets shut.

Millions of shoppers made a last-minute dash to stores in recent weeks, while nervous retailers are now watching for signs of falling sales.

The last time Japan rolled out a higher sales levy, in 1997, it was followed by years of deflation and tepid growth, although other factors, including the Asian financial crisis, were also blamed.

Among those waking up to the higher prices was 18-year-old university student Hibiki Ishida, who was not impressed when he bought his favourite chewing gum on Tuesday.

"I get this gum every morning and I know the price is 120 yen ($1.15)," he said. "But I handed 120 yen to the shop clerk today and she told me it was now 123 yen — that unnerved me."

Others, like a 20-year-old graduate surnamed Yoshida — who is set to start a new job and live on her own — have been planning for the hike, with some help.

"My mother has given me lots of daily stuff like tissue paper and plastic cling wrap," she said.  "So I can survive for the time being."

The rise has presented a huge challenge for Prime Minister Shinzo Abe since he swept to power in late 2012 on a ticket to drag the world's number-three economy out of a cycle of falling prices and tepid growth.

Nervous retailers 

On Tuesday, defending the rise — which could be followed by another, to 10 per cent — Abe pointed to spiralling healthcare and social welfare costs, which are straining the public purse in a rapidly ageing society.

The rise "is meant to offset increases in social security costs over the years and to maintain the country's trust", he told reporters, adding that the battle to defeat years of growth-sapping deflation would continue.

But a Kyodo news agency poll earlier this year said about three quarters of Japanese felt no impact from the growth efforts, which included an unprecedented monetary easy programme by the Bank of Japan (BoJ) that helped sharply weaken the yen and boost company profits.

Retailers launched special deals to keep customer traffic steady, such as offering more points on shopping cards or promising a boost to the quality — and in some cases, volume — of their pricier products.

"There is a risk that my sales will drop," said Masayuki Komatsubara, who runs a small Tokyo shop that sells seaweed and other dried food products. "I'm going to try to find cheaper stuff with the same quality...so that my prices don't rise too much."

Grocery store giant Inageya said it had to temporarily shut half its 130 locations Tuesday, after technical problems tied to adjusting cash registers for the rate hike.

Earlier in the day, a closely watched BoJ survey showed that business confidence soared to a more than six-year high in the January-March quarter.

However, companies were cautious about the future as the survey of more than 10,000 firms pointed to lukewarm investment and slumping sentiment for the April-June quarter.

"Firms are cautious about the future course of the economy as the impact of the tax hike remains uncertain," said Hideki Matsumura, an analyst at Tokyo's Japan Research Institute.

While Toyota, Panasonic and other major companies are boosting wages for the first time in years, exports are still struggling and Japanese factories logged a surprising drop in February output.

Tokyo's bid to stoke lasting inflation appear to be taking hold which, together with higher prices due to the tax rise, has exacerbated concerns that the economy could lose its momentum.

The government has launched a special budget to help counter any slowdown while some are looking to the BoJ's easing campaign to help soothe the impact of a fall in consumer demand.

"I believe in three months' time we will be saying the impact on the economy from the tax increase wasn't that bad," Yuki Endo, an economist at Hamagin Research Institute, told Dow Jones Newswires. "The economy will overcome the tax hike."

HONG KONG — The Asian Development Bank (ADB) on Tuesday said growth in developing Asia will edge higher over the next two years, but faces being constrained by China's campaign to cool its economy.

The Manila-based lender said in a forecast that adjustments in China, the world's second-largest economy and a key growth driver, could offset improving demand as growth picks up in advanced economies such as the United States, Europe and Japan.

The ADB estimated that gross domestic product (GDP) for developing Asia, which covers 45 nations, will grow 6.2 per cent this year before edging up to 6.4 per cent in 2015. Last year, the region expanded by 6.1 per cent.

"At this rate, developing Asia will remain the fastest-growing region in the world and the largest contributor to global growth," ADB deputy chief economist Zhuang Juzhong told a press conference in Hong Kong.

However "East Asia will see its growth trend flatten as growth moderates in the People's Republic of China," the lender said in its Asian Development Outlook 2014 statement, citing Chinese authorities' efforts to control credit growth.

"The regional growth outlook depends on continued recovery in the major industrial economies and on the People's Republic of China managing to contain internal credit growth smoothly," it added.

The ADB expects China's economic growth to slow to 7.5 per cent this year, and a further drop to 7.4 per cent in 2015, from 7.7 per cent last year.

"The government continues to shift priority towards quality of growth. This may slow China's growth in the short term but will make growth more sustainable in the longer term," Zhuang indicated.

At a separate briefing in Beijing, ADB economists said China's efforts to rebalance its economy are bearing fruit.

China's service sector grew more strongly last year than did industry and now accounts for a larger share of GDP, indicated Jurgen Conrad, who heads the ADB's economics unit in China's capital.

He described that as "a major achievement from the point of view of domestic rebalancing", though he added that the economy was still mainly driven by investment growth even as consumption showed strength.

China's leadership says it wants to transform the country's growth model away from an over-reliance on often wasteful investment and instead make private demand the driver for more sustainable future development. 

The ADB forecast the South Asia region to grow by 5.3 per cent this year, relying on continuing reform in India which is "operating below its potential" with a forecast 5.5 per cent expansion in 2014. 

Southeast Asia suffered a blow last year with softened export and economic slowdowns in various countries, as GDP decelerated to 5 per cent last year. The ADB said similar expansion is expected in 2014. 

It also warned that US tapering could bring fluctuations in financial markets although the risks would be "manageable".

"Developing Asia now is in a much better position to weather shocks like that," Zhuang said, adding that many countries in the region have surpluses and stronger banking systems.

Founded in 1966, the ADB aims to reduce poverty in Asia by helping its 67 member countries evolve into modern economies through investment in infrastructure, financial and public administration and health services.

AMMAN — Industry, Trade and Supply Minister Hatem Halawani discussed with two Sudanese ministers on Monday the mechanisms needed to enhance investment and commercial relations between Jordan and Sudan. According to a press statement received from the Ministry of Industry, Trade and supply, Halawani told the visitors that protocols and memoranda of understanding should not be kept on desks and that the private sector in both countries should seize opportunities to elevate the level of cooperation. He stressed Jordan’s readiness to provide all technical support to Sudan whether in terms of parallel consumer markets or industrial/free zones. Halawani expressed hope that the Joint Higher Committee’s technical and ministerial panels meeting presently in Amman would come up with practical results to advance Jordanian-Sudanese economic ties. The statement said Jordan is keen to raise the level of investments in Sudan noting that more than $1 trillion are invested in the industrial, agricultural and financial sectors.  The ministers mentioned opening marine transport channels as a viable conduit to activate bilateral trade. 

DUBAI, United Arab Emirates — Despite improvements in regulations and moves to diversify Arab economies away from natural resources, global investors remain wary of doing business in Gulf countries because of regional upheaval and other potentially destabilising factors, according to a report by The Economist Intelligence Unit (EIU) released Monday.

The report found that investors are also "moving cautiously" in the region because of concerns over government transparency, foreign ownership restrictions and difficulties in enforcing commercial laws.

However, successful bids by Dubai to host the World Expo in 2020 and by Qatar to host the FIFA World Cup in 2022 have helped put a spotlight on investment opportunities in the Gulf, said the report, which was sponsored by Merck Serono, the biopharmaceutical division of Merck.

According to experts quoted in the report, Arab Spring protests have scared investors, even though the Gulf region did not experience the kind of upheavals seen in Yemen, Egypt, Syria and Libya. 

Protests by Shiites in the tiny island-nation of Bahrain threatened to spill over into Saudi Arabia's eastern region, where the kingdom's minority Shiites mostly reside.

"The Arab Spring has had a negative impact on perceived stability. Even where you haven't had a major event, political risk is more on investors' minds than before," chief economist for the Middle East at Citi Group, Farouk Soussa, said.

He indicated that in some cases, capital has flocked from the wider Middle East to Gulf countries seen as stable, like the United Arab Emirates (UAE). 

The Arab Spring has also opened opportunities for wealthy Gulf governments to reinforce ties and influence with countries like Egypt, where billions of dollars have been invested and given in aid.

With rising unemployment and a population of which nearly half is under the age of 25, Saudi officials have promised more than $100 billion in state jobs and other handouts. The kingdom's Gulf neighbours have also opened their treasuries to literally buy time and avoid protest demands for wider reform.

The EIU says this kind of economic model "tends to crowd out entrepreneurship" by keeping the focus on oil extraction, which is the main source of revenue.

The report concludes that foreign investment is still less than before the 2008 financial crisis across most of the six-nation Gulf Cooperation Council (GCC), comprised of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.  

The exception is Kuwait, where as in Bahrain, the majority of foreign investments have come from other GCC countries, according to the latest data provided in the report.