The Golden Fringe

Company limousines roll through the British countryside carrying executives' children from their boarding schools to holidays at home. France's nationalized coal companies provide their engineers with rent-free homes. Swedish business men hunt elk in company-owned forests. Officials of Rio de Janeiro's Mesbla department store enjoy free vacations at their company's summer resort. All these--and many more--are the fringe benefits that are taken for granted by executives abroad, and account for the fact that they can often live high on salaries that usually run much lower than those in the U.S.

Such fringes are most generous in West Germany, where companies lavish benefits on the lowliest employees as well as on the highest executives. A manufacturer passes out free opera tickets. Brewery hands carry home two to four liters of beer every day; slaughterhouse workers are entitled to half a side of pork each month. Employees of the Reemtsma cigarette company get 30 free packs of cigarettes a month--which they often sell.

Such largesse is nominal compared with what a middle-ranking executive gets. His rent is often subsidized, and he also has the use of a company car and chauffeur. In many cases, the company hires a gardener for him, stocks his wine cellar and pays his utility bills. On weekends, the executive can relax at one of the firm's winter or summer retreats. Once a year he may choose to recuperate at Baden-Baden or some other spa, imbibing mineral waters and immersing himself in medicinal mud at company expense. Other German executives annually are given blank airline tickets for themselves and their wives. They may fill out the tickets for "business" trips to any place they care to visit.

Under the Table. Instead of paternalistic emoluments, Italian executives often collect under-the-table cash bonuses, which the company camouflages on its books as "miscellaneous expenses." Payments to top managers run as high as $20,000 a year. Small private firms rely on generous automobile allowances.

By comparison, British executives lead a constrained existence. Since 1965, entertaining has been disallowed as a taxdeductible expense for British companies. Tax officials have plugged most other benefit loopholes as well, and corporate perquisites are miserly, especially at London headquarters. In the provinces, some fringes survive. Company mechanics repair the cars of board members; doctors are on call for executives and their families.

Life for French executives, too, is growing a bit less opulent because of recent tax reforms. As long-standing masters of tax evasion, many French businessmen still manage to support their families largely at company expense. But there is now an extra tax on company-owned cars, and it is becoming increasingly difficult for a top executive to prove that, merely for business entertaining, he really needs a company-paid mansion staffed with cook, butler, chauffeur and gardener. He might get away with writing off a hunt as a business expense, and at least a few executives still enjoy a time-honored French fringe benefit: charging off to company advertising expenses the rent and bills of their mistresses.

Tax-Free Diversions. In Japan, the system for subsidizing executive fun and games works somewhat differently. At the end of each month, women who run geisha houses and popular bars troop to the accounting departments of big firms. Each visitor carries sheafs of bills and whispers the name of the executive-san concerned. They are paid, no questions asked. The Japanese executive has the world's most generous expense account for nocturnal diversions. A government survey found that in 1967, Japanese businessmen spent $1.4 billion on nontaxable "official entertainment." The 1,140 bars along Tokyo's Ginza depend on the free-spending businessman, who likes to do his entertaining away from wife and home. If it were not for the golden fringes, the main streets of Tokyo--and many other great cities--would be dull indeed after dark.

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