Let’s Jettison Some Executive Perks: Exploring the SEC and IRS Approaches to Personal Use of Corporate Aircraft

In 2023, 46% of the S&P 500 companies provided personal use of corporate aircraft to their chief executive officers, and 31% provided this perk to other named executive officers. This type of executive compensation has notoriously garnered much attention from the media, given the large amount of investor money spent on personal travel and the environmental impacts of flying private. In addition, the line between personal travel and business travel is often blurred, and the media has tracked flight paths of corporate aircraft to speculate that some flights may be incorrectly categorized as business trips when the jets land and take off from resort destinations where an executive may have a second home. The United States Securities and Exchange Commission (SEC) and the Internal Revenue Service (IRS), separate government agencies with distinct focuses, both seek to promote fairness in the United States through disclosures and taxation. The SEC has often scrutinized executive perquisites and aims to provide investors with accurate disclosures so they can make informed investment decisions. The IRS recently reported that it plans to audit corporate aircraft reporting at large companies and subsequently audit high-net-worth individuals who may receive this perk from large companies. ESG concerns—an especially controversial topic today—have also shaped how people view private jet travel, with reports estimating that private jets emit five to fourteen times more pollution per passenger than commercial flights. Additionally, emissions attributable to the wealthy, those who frequently fly private, account for more climate change effects than those of low-income earners.