Picture of CEO
06
Sep

The Cost of Protecting the Boss

With executive compensation practices and policies a salient topic since the 2008 global financial crisis, the cost of security for executives has come closer to the spotlight.  Though the term “executive protection” conjures up images of extravagance for most, the Fortune 100 sees it as a necessity.  In 2014, Salesforce spent almost 1.5 million USD to protect Mark Benioff.[1] However, even for the Fortune 100, the size of this expenditure is an outlier and dwarfs those of other high-profile CEOs. Specifically, the cost of executive protection consists of travel-related security, as well as home security.

So why do these companies, whose practices are scrutinised by boards, shareholders, and regulators, do this?  Though large differences exist from case to case, many companies purchase executive protection because the time saved and the risks mitigated are almost always deemed a very sound investment.  Even companies outside the Fortune 1000 are ready to make such expenditures, provided they have the liquidity for it. While a large, cash-flooded company like Facebook would shell out millions on executive protection without batting an eye, smaller companies may also reap benefits from the time saved and risks mitigated, even if they buy services in smaller quantities or on a case-by-case basis.

If a security detail can save an executive hours over the course of a trip, this effectively translates into money saved, as productivity otherwise wasted to travel logistics is spent where it benefits the company. For medium-sized corporations, the investment calculation depends more on the given affairs of the executive around the time of the trip.  Of course, if the CEO’s schedule happens to be relaxed around the time of the trip, the expenditure may be harder to justify.  Some CEOs have permanent, full-time security details, which are unnecessary for most companies.

Frequent travelers are familiar with situations of a delayed or cancelled flight, being forced to spend the night near the airport and leave the next day.  For an executive in this situation, nearly an extra day away from the office (on top of the standard time spent for normal travel) can be disastrous.  Apart from a nightmare scenario, executive protection services like those offered by Panoptic Solutions save the time of waiting in airports, security lines, and waiting for second-rate drivers not to mention the medical and security expertise included.