289 employees laid off at Time Magazine
FLASHBACK: TIMEWARNER CHAIRMAN PARSONS BILLS COMPANY FOR JET TRIPS TO HIS ITALIAN VINEYARD…
‘All in all, as you can see, we’re off to a terrific start in 2007. Hats off to everyone for the great work’ — Parsons in email to TIMEWARNER STAFF, 1/17/07…
According to Advertising Age, an online magazine, Time Inc., the country’s largest magazine publisher, spent the morning telling hundreds of staffers their jobs were being eliminated — in its latest and largest yet round of staff cuts — for the company’s good.
Richard D. Parsons, chairman and chief executive of Time Warner, owns a small vineyard in Tuscany that produces a Brunello di Montalcino selling for $80 a bottle, adorned with a crest of the Parsons family.
Twice a year, he boards one of his company’s four jets to visit his 20 acres in Italy. When he does, Time Warner shareholders pick up the bill.
Taking the corporate jet is variously described as a necessity for time-pressed executives and politicians, a luxury for the elite, a security precaution, or an addiction, depending on who is talking.
Congress changed the law, and the Internal Revenue Service issued new guidelines last year, scuttling the tax break when it involves personal travel instead of business travel. The actual cost to Time Warner of Mr. Parsons’s round trip to Italy might be anywhere from $60,000 to $170,000, according to Conklin & de Decker Aviation Information, an aviation research and consulting company. Previously, the company could write off the full cost, for a tax savings of up to $42,500, assuming a 25 percent corporate tax rate. No longer.
The company’s tax break now is generally limited to the much lower amount added to the executive’s income for that jet’s use. That figure is not disclosed. For Mr. Parsons, the base income would be just $2,800, using a formula established by tax and transportation authorities of 14 to 21 cents a mile and a landing fee. Shareholders make up the difference between the $42,500 no longer saved on taxes and the $2,800.
The extra cost is more symbolic than significant to companies with billions in revenue. But it means that each time executives use corporate aircraft for their personal travel at cheap rates, they shift even more costs to shareholders.
Executives are well compensated, some critics say, and such perks send the wrong signal to workers while diverting corporate resources that could be better used elsewhere.
For Mr. Parsons, who had a pay package of $16 million last year, a Gulfstream charter flight to Italy would be about $90,000 round trip, using the $5,000 an hour estimated by Conklin & de Decker. Assuming a combined federal and state personal tax rate of 40 percent, his taxes would rise to $36,000, from about $1,100, on the trip.
The company, which confirmed that his Italian vacations were treated as personal trips, declined to specify the total expense and tax impact.
Compliments NY Times, Patrick McGeehan and David Cay Johnston contributed reporting for this article.