May 14, 2008
Lately, it seems that most companies are taking big hits from just about every angle.
The Wall Street Journal wrote about another source of bleeding money today: executive relocation costs.
Here’s the news peg: Qwest Communications investors are seizing the company’s annual meeting next week as an opportunity to vent their frustrations. See, the company lost $1.8 million on the sale of the former home of the chief executive.
During his recruitment, Qwest agreed to purchase the home if he couldn’t find a buyer. He couldn’t, so Qwest sunk $8.9 million into the house in September. When the home sold in December, Qwest only reaped $7.1 million.
But Qwest isn’t the only “victim” of this kind of loss, the WSJ found:
Other shareholders are in for similarly rude shocks this spring, as companies disclose sizable bills to cover real-estate losses of transferred senior officers. At least eight companies say they’ve spent $500,000 or more to help an executive sell a former residence. Qwest is the biggest spender so far. Others include Boston Scientific Corp., Kellogg Co. and State Auto Financial Corp.
Of course, paying for relocation expenses is nothing new, especially for top execs. But the housing slump’s causing the cost to the company to rise, and tougher disclosure rules mean that the juicy details become common knowledge.
According to the WSJ, Weichert Relocation Resources surveyed 200 companies and found that 68 percent reimburse some or all of a staff member’s loss on a home sale.
Heard of any other egregious losses?
JACKIE SAUTER, Web Editor