BOSTON - As Tiger Woods staged his dramatic comeback at Augusta National Golf Club earlier this year, most of Emerson Electric Co’s fleet of luxury corporate jets swooped in.
Hedge fund D.E. Shaw, which owns more than 1% of the company, earlier this month wrote to Emerson’s board and spotlighted the “great expense to shareholders” of its corporate jets, seeing them as emblematic of a “bloated structure and expense base.” The fund is agitating for big changes at Emerson, including splitting it in two, and is seeking support from other shareholders.
The size of the fleet and the number of times Emerson’s Chief Executive David Farr uses the planes for personal trips is out of step with most major U.S. companies. Some others have sold their jets, and those retaining them have smaller fleets than Emerson, National Business Aviation Association data show.
This reasoning is challenged by corporate governance expert Jonathan Macey, a Yale Law School professor. Given tight security at most airports that argument “is just balderdash,” he said. The fanciest jet in Emerson’s fleet is a 2013 Dassault Falcon 7X, which it bought last year for an undisclosed sum. The price tag for the plane, which seats up to 16 and can be equipped with an on-board shower, would be between $25 million and $30 million, according to SherpaReport.com.
you may recognize this pic from our '7 Corporate Rails You HAVE to Grind Today' slideshow