At some companies, chief executives are due hefty amounts - when or if they move on - for their unused vacation time. (Representational Image)
As we say goodbye to 2015, many employees are using up their final vacation days of the year. That's especially true for those whose workplaces have a "use it or lose it" policy, under which staffers cannot roll their unused days over to the following year.
But at those companies that do let employees carry over much or all of their paid time off to the following year, all that accrued vacation time can start to add up. And that applies to top executives more than anyone else.
At some companies, chief executives are due hefty amounts - when or if they move on - for their unused vacation time. If Qualcomm chief executive Steven Mollenkopf were to leave the company, he would be owed $185,177 in accrued time, the company's most recent proxy indicates, according to data compiled by Bloomberg News. And HCA Holdings chief executive R. Milton Johnson had $152,308 tallied at the end of 2014 that he would be due in the event he left the company.
At Whole Foods, co-chief executive Walter Robb has $613,836 banked because of 2,703 time-off hours he has not used in his 24 years at the company. Company spokesman Michael Silverman said in an email that all "team members," including executives, will get their paid time off balance when they leave the company. Robb's accumulated amount reflects the executive's long service at the company, Silverman said. He also noted that cash compensation at Whole Foods is limited to 19 times the average annual wage of full-time employees, an approach "that distinguishes Whole Foods Market from many other publicly traded companies."
The reason for those tallies, of course, is twofold: The obvious one is that most chief executives have big paychecks, and some clearly aren't taking much of their allotted vacation. In addition, as with Whole Foods, many companies have policies - or are required by state law - to pay out unused vacation time when any employee exits, whatever the person's status at the company. (Whole Foods workers are also given the option once a year of cashing in their unused personal time off at 75 percent of its value, a choice a few companies still offer.)
"When you see these large values, in many cases all that means is the chief executive is covered by the same policy as other employees," said Pete Lupo, a managing director at the executive compensation consultancy Pearl Meyer & Partners.
They're just paid more, of course, which means that all that accrued vacation time can pile up in terms of liabilities the company has to carry forward. Research from Oxford Economics, which looked at filings with the Securities and Exchange Commission by 114 public companies, found that U.S. companies carried forward $65.6 billion in accrued paid time-off costs on their books last year, with an average vacation liability per employee of $1,898.
When Henrique de Castro, the former Yahoo chief operating officer who spent just 15 months in the job, left the company this year, he exited not only with a huge severance package but $29,491 in unused vacation pay. When Weyerhaeuser executive vice president Thomas Gideon retired in 2014 after 36 years, he received a payout of $129,063 for unused time off.
Such figures are one reason more companies have been adding the "unlimited vacation" policies that have become popular with Silicon Valley start-ups, particularly for their executive or professional employees. If there is no policy, there is no bank of vacation time for employees to accrue or not accrue, said Carol Sladek, a partner who leads work-life consulting at Aon Hewitt.
"Many employers are doing this now for top tiers or executives," Sladek said. Not only are there fewer people keeping track of how much time these senior folks take off, making a closely scrutinized policy less applicable, she said, but they also often have the kind of jobs where they aren't able to get away as much. "They're the highest paid, so that's a big number," she said. Switching to a policy that doesn't track time off is "kind of a no-brainer."
Companies that are not going so far as to cut out vacation parameters are more actively urging employees to use their time. "When employees take vacation, everybody wins," said David Wise, U.S. market leader for Hay Group. "The company can remove those costs from their books, and employees theoretically come back refreshed."
By the time companies get to the fourth quarter, Wise said, some "are urging employees to please take vacation, otherwise it will hit their financials. The irony is it can cost more for employees not to take vacation than it will for employees to take it."
So shouldn't companies be urging chief executives, too, to take their vacations? Perhaps, but the reality is that many of these top jobs, particularly at major, publicly traded corporations, simply do not have off switches. "CEOs work seven days a week. It's the nature of that job," Pearl Meyer's Lupo said. "At that level, time is amorphous. This is not a nine-to-five job, and it never will be."
© 2015 The Washington Post
But at those companies that do let employees carry over much or all of their paid time off to the following year, all that accrued vacation time can start to add up. And that applies to top executives more than anyone else.
At some companies, chief executives are due hefty amounts - when or if they move on - for their unused vacation time. If Qualcomm chief executive Steven Mollenkopf were to leave the company, he would be owed $185,177 in accrued time, the company's most recent proxy indicates, according to data compiled by Bloomberg News. And HCA Holdings chief executive R. Milton Johnson had $152,308 tallied at the end of 2014 that he would be due in the event he left the company.
At Whole Foods, co-chief executive Walter Robb has $613,836 banked because of 2,703 time-off hours he has not used in his 24 years at the company. Company spokesman Michael Silverman said in an email that all "team members," including executives, will get their paid time off balance when they leave the company. Robb's accumulated amount reflects the executive's long service at the company, Silverman said. He also noted that cash compensation at Whole Foods is limited to 19 times the average annual wage of full-time employees, an approach "that distinguishes Whole Foods Market from many other publicly traded companies."
The reason for those tallies, of course, is twofold: The obvious one is that most chief executives have big paychecks, and some clearly aren't taking much of their allotted vacation. In addition, as with Whole Foods, many companies have policies - or are required by state law - to pay out unused vacation time when any employee exits, whatever the person's status at the company. (Whole Foods workers are also given the option once a year of cashing in their unused personal time off at 75 percent of its value, a choice a few companies still offer.)
"When you see these large values, in many cases all that means is the chief executive is covered by the same policy as other employees," said Pete Lupo, a managing director at the executive compensation consultancy Pearl Meyer & Partners.
They're just paid more, of course, which means that all that accrued vacation time can pile up in terms of liabilities the company has to carry forward. Research from Oxford Economics, which looked at filings with the Securities and Exchange Commission by 114 public companies, found that U.S. companies carried forward $65.6 billion in accrued paid time-off costs on their books last year, with an average vacation liability per employee of $1,898.
When Henrique de Castro, the former Yahoo chief operating officer who spent just 15 months in the job, left the company this year, he exited not only with a huge severance package but $29,491 in unused vacation pay. When Weyerhaeuser executive vice president Thomas Gideon retired in 2014 after 36 years, he received a payout of $129,063 for unused time off.
Such figures are one reason more companies have been adding the "unlimited vacation" policies that have become popular with Silicon Valley start-ups, particularly for their executive or professional employees. If there is no policy, there is no bank of vacation time for employees to accrue or not accrue, said Carol Sladek, a partner who leads work-life consulting at Aon Hewitt.
"Many employers are doing this now for top tiers or executives," Sladek said. Not only are there fewer people keeping track of how much time these senior folks take off, making a closely scrutinized policy less applicable, she said, but they also often have the kind of jobs where they aren't able to get away as much. "They're the highest paid, so that's a big number," she said. Switching to a policy that doesn't track time off is "kind of a no-brainer."
Companies that are not going so far as to cut out vacation parameters are more actively urging employees to use their time. "When employees take vacation, everybody wins," said David Wise, U.S. market leader for Hay Group. "The company can remove those costs from their books, and employees theoretically come back refreshed."
By the time companies get to the fourth quarter, Wise said, some "are urging employees to please take vacation, otherwise it will hit their financials. The irony is it can cost more for employees not to take vacation than it will for employees to take it."
So shouldn't companies be urging chief executives, too, to take their vacations? Perhaps, but the reality is that many of these top jobs, particularly at major, publicly traded corporations, simply do not have off switches. "CEOs work seven days a week. It's the nature of that job," Pearl Meyer's Lupo said. "At that level, time is amorphous. This is not a nine-to-five job, and it never will be."
© 2015 The Washington Post
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