Executive flights on corporate jets worth millions more than reported

Disney said it spent almost $800,000 for Bob Iger to use company aircraft for personal trips in the last fiscal year. Taking similar trips at his own expense would have cost the chief executive more than $2 million, a Wall Street Journal analysis found.

The same is true for other executives. Netflix co-founder Reed Hastings took personal flights on company aircraft in 2022 that would have cost him about $2.2 million by Journal estimates; the company reported spending about half as much. Chief Executive David Calhoun’s personal flights on Boeing’s tab would have cost him $1.25 million, more than double what the company said it spent.

At many of the biggest U.S. companies, CEOs and other executives are getting tens or hundreds of thousands of dollars more in flight benefits than company disclosures suggest. The contrast underscores the gap—already stark with the stock and options that make up the bulk of CEO pay—between the reported costs of executive compensation and the benefit executives receive.

Executive jet use is also under heightened scrutiny after the Internal Revenue Service has announced a plan to audit personal aircraft use by executives and wealthy individuals.

The corporate jet looms large among the perks that the biggest U.S. companies offer their top executives, alongside million-dollar salaries, annual bonuses and slugs of stock or options. Many corporate officers are allowed to take the same jets on vacation, to visit relatives or commute from other homes—and some can fly family and friends—all at company expense.

Boards often require CEOs to fly corporate, both on and off the job, calling it safer and more efficient. The perk can be a big draw in compensation packages, aviation and compensation consultants say.

“It’s one of the few status symbols you don’t get tired of," said Christopher Hewett, a retired public-company executive who helped draft flight-perk disclosures as a corporate attorney and enjoyed his own trips on company planes.

Spending on the perk has doubled since 2019 at companies that reported providing it last year, outpacing the overall growth in business-jet travel.

Under federal securities rules, companies must report as compensation the “aggregate incremental cost" of perquisites such as free personal flights. Most say they count expenses directly tied to a specific trip, including fuel, landing fees, airport taxes, catering, crew lodging and meals, and an hourly rate for maintenance, plus the cost of repositioning empty aircraft for later use, securities filings show. (Trip values are calculated differently for tax purposes.)

Typically left out: fixed costs that don’t change by flying more, including pilot salaries, insurance and the cost of acquiring the aircraft. Companies say they would pay these costs anyway, because the aircraft are primarily used for business.

Charter companies charge customers thousands of dollars an hour to fly on similar jets, fees set to cover both the incremental costs reported by the executives’ employers as well as fixed costs—and a margin for profit.

The result: a gulf between what executives save by taking personal flights in the company jet and what companies report spending on the trips.

Disney Aviation Group, a unit of the entertainment company that flies executives and other employees, has registered three Gulfstream G650 jets and a Gulfstream G600 with the Federal Aviation Administration. With a crew of two, each can seat as many as 18 to 19 passengers, depending on configuration, and rank among the biggest—and costliest—business jets in regular use.

Flying them can cost over $5,000 an hour in the incremental expenses that companies add up when disclosing executives’ personal flight costs. That means Iger’s personal flights last year, which cost Disney $794,000, worked out to about 130 hours of flight time, or around 2½ hours a week. (That figure likely includes time spent moving empty aircraft in connection with personal trips.)

Chartering similar aircraft can cost $12,000 to $20,000 an hour, according to data from companies and brokers that help passengers charter private aircraft. At those rates, Iger’s personal flights last year would have cost him $2 million or more.

Charter rates can vary widely by season, geography and other factors.

Still, charter costs are “the only apple-to-apple comparison" for flying in a corporate jet, said Aaron Glassman, who heads a management and technology department at Embry-Riddle Aeronautical University, a private institution emphasizing aviation with campuses in Daytona Beach, Fla., and Prescott, Ariz.

Executives often wind up chartering planes when they can’t use the company’s, he added. “That is Plan B, and executives have to do that with some regularity."

The $1 million Netflix reported spending in 2022 on personal flights for Hastings works out to more than 220 hours aloft based on its fleet that year, his last as CEO. At the time, Netflix flew aircraft including Gulfstream V jets and Beech King Air turboprops. (The company said it shed two of the aircraft last year.)

A Netflix spokesman said Hastings didn’t fly that many hours during the year, declining to elaborate. When reporting the cost of executives’ personal flights, companies often count “dead legs," or flights taken to reposition empty aircraft, that result from executives’ personal travel.

Hastings, Netflix’s co-founder, stepped down as CEO in January last year and remains its executive chairman. Personal flights for his successors, co-CEOs Ted Sarandos and Greg Peters, worked out to about 150 hours of flight time apiece last year, the Journal analysis estimated.

The company said in securities filings that those flights cost it $1.2 million combined. Chartering similar aircraft would have cost the two men about $2.6 million, the Journal found.

Behind companies’ disclosures are many decisions and records detailing which flights count as business, personal or some of each, aviation experts say. “It’s not the math—it’s the classifications that become where the complexity is," one consultant said.

Errors can add up. In early April, Boeing said it had improperly recorded personal flights as business travel over two years for four executives, including departing CEO Calhoun. Those improperly reported flights cost the company just over $500,000, much of it for the use of corporate aircraft, the company said in securities filings.

The company identified the errors after a Journal investigation in September found patterns of flights by Calhoun and others to and from homes in far-flung places.

Calhoun’s misreported flights, which Boeing said cost it $142,315, would likely have cost him between $350,000 and $450,000 at charter rates, based on the seven jets operated by Boeing Executive Flight Operations, the Journal found.

To cover all of his personal flights on Boeing aircraft in the past two years, Calhoun would have had to spend about $2.1 million in the air charter market, the Journal estimated. The company reported its cost at just over $840,000, including this month’s revisions.

A Boeing spokesman declined to comment beyond the company’s securities filings.

Boeing has said Calhoun would step aside by the end of this year, as part of a shake-up after the midair blowout of an airline door plug on Jan. 5 and a series of production problems.

Write to Theo Francis at theo.francis@wsj.com