This excerpt taken from the CEPH DEF 14A filed Apr 12, 2007.
Perquisites. Our NEOs receive various perquisites provided by or paid for by the Company. These perquisites include automobile allowances, financial and estate planning services, supplemental long-term disability insurance, personal use of the corporate aircraft (subject to the execution of a Time Sharing Agreement as described below), executive health care benefits and gross-up payments equal to the taxes payable on certain perquisites.
We provide these perquisites because in many cases the perquisite makes our executives more efficient and effective and thereby is a benefit to the Company. Additionally, perquisites are provided by many companies in the Peer Group to their named executive officers and it is therefore necessary for retention and recruitment purposes that we do the same.
The Committee reviews the perquisites provided to its NEOs on a regular basis, in an attempt to ensure that they continue to be appropriate in light of the Committees overall goal of designing a compensation program for NEOs that maximizes the interests of our stockholders.
The benefits are summarized as follows:
We also provide our executive officers with the option to utilize Cephalons corporate aircraft for personal use, subject to the execution of a Time Sharing Agreement with the Company. Under the Time Sharing Agreement and the Companys internal policies, an executive must reimburse the Company for the personal use of the aircraft by the executive and the executives guests. It is our intent that, in all cases, the amount reimbursed by the executive for personal use is the greater of the incremental operating costs associated with the use of the aircraft and the amount of income that would be required to be imputed to the executive under Internal Revenue Service regulations, subject in each case to the maximum reimbursement amount permitted under Part 91 of the U.S. Federal Aviation Administration regulations.
Dr. Baldino has reimbursed the Company $63,157 for his personal use of the corporate aircraft during 2006. Because Dr. Baldinos payment to the Company exceeded the value of his personal use as calculated in accordance with the standard industry fare level, or SIFL, rates set by the IRS, we did not impute any income to Dr. Baldino in 2006. Likewise, for SEC reporting purposes, we have determined that the amount reimbursed by Dr. Baldino to the Company exceeded the estimated incremental cost to the company of his personal use of the aircraft. For this reason, the Summary Compensation Table shown on page 25 does not include any compensation to Dr. Baldino related to this perquisite. None of the other NEOs used the corporate aircraft for personal use during 2006.