U.S. Treasury Dept. Links BizAv, Luxury

Feb 4, 2009
Kerry Lynch



The U.S.Treasury Department Wednesday unveiled a series of restrictions on executive compensation for companies receiving exceptional assistance from the federal government and called for more transparency with the use of 'luxury expenditures,' including aviation services.

The Treasury Department said the measures "are designed that public funds are directed only toward the public interest in strengthening our economy by stabilizing are financial system and not toward inappropriate gain." The latest restrictions target banks needing exceptional assistance, which the Treasury Department defined as those that have specific negotiated agreements with Treasury and need more than is allowed under a widely available standard program. Treasury cited AIG, Bank of America and Citigroup as examples.

Unlike past directives coming from the White House and Congress, the latest restrictions do not appear to ban aircraft ownership. But the language still links aviation to "luxury expenditures." The guidelines require "board of directors' adoption of company policy relating to approval of luxury expenditures," including any expenditures related to aviation services, office and facility renovations, entertainment and holiday parties and conferences and events.

The policy does not specify which "aviation services" - whether it is use of business jets or a first-class ticket on an airliner. The policy adds it is not intended to cover "reasonable expenditures for conferences, staff development, reasonable performance incentives and other measures tied to a company's normal business operations." The policy further sates companies should post the text of the policy on their Web sites.

Business aviation groups, reeling from a series of critical stories about financially troubled companies using corporate jets, were assessing the latest policy. "It is clear from this action that the White House recognizes the need for businesses to use their airplanes to survive, especially in this tough economy," the National Business Aviation Association said.

"The call for more transparency by President Obama is not a problem," said Paul Feldman, vice president of government affairs, General Aviation Manufacturers Association. "We will continue to work with the Administration and other policymakers to inform them about the necessity of general aviation for creating jobs and sustaining businesses. "

Hawker Beechcraft 400XP photo: Hawker Beechcraft