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AFIMAC CEO, Peter Martin, Quoted in Bloomberg ‘Facebook Spent $12.5 Million to Protect Zuckerberg Since 2013’

April 29th, 2016 Comments off

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Facebook Inc. revealed that it spent $4.26 million on security for Mark Zuckerberg last year, its first disclosure of such costs, and the highest among companies in the Standard & Poor’s 500 Index that have filed proxy statements for fiscal 2015.

The expense brings the total cost from 2013 to 2015 to $12.5 million, according to a regulatory filing. The cost was “to address safety concerns due to specific threats to his safety arising directly as a result of his position as our founder, Chairman, and CEO,” the company said in the filing. Zuckerberg is the world’s eighth-richest person with $47 billion, according to the Bloomberg Billionaires Index.

Facebook spent $5.6 million for Zuckerberg’s security in 2014 and $2.65 million in 2013. Last year’s expense exceeds the $1.53 million Oracle Corp. spent to protect Executive Chairman Larry Ellison in fiscal 2015 and Amazon.com Inc.’s $1.6 million for Jeff Bezos, according to data compiled by Bloomberg. The figure also outstrips other famous executives. Berkshire Hathaway Inc. paid $370,244 for personal and home security for billionaire Warren Buffett in 2015. Apple Inc. spent $209,151 on Tim Cook.

Facebook made the disclosure this week after the U.S. Securities and Exchange Commission in August questioned why the costs had never been listed in filings as a taxable perquisite. In response, Facebook argued that a “business-oriented security concern” identified for Zuckerberg exempted it from having to report those expenses. After discussions with SEC staff, the company reversed its position, according to a filing.

Home Security

Facebook spokesman Jonathan Thaw declined to comment. Chief executives of global businesses are often required by their boards to travel on company-provided planes or cars even for personal trips. More than half of firms in the S&P 100 Index had such policies last year.

Facebook provides Zuckerberg with a home security system and guards who also protect his house in San Francisco’s Mission District. The team is overseen by a former U.S. Secret Service agent who protected President Barack Obama.

Security “should be a board of directors’ first and foremost concern,” especially at companies built around a central figure, said Peter Martin, chief executive of security consultancy AFIMAC Global. “As a shareholder, you want to make sure that your CEO is protected.”

Closer Look

That doesn’t come cheap. Each around-the-clock assignment requires four full-time guards, which annually can cost more than $80,000 each, said Christopher Falkenberg, chief executive of New York-based Insite Security Inc.,which provides protection to clients including hedge funds. A security director can earn about $200,000 a year.

Recent terrorist attacks in two European capitals and an office shooting in San Bernardino, California, have prompted some boards to re-examine security. While the risk for a little known top executive may be low, a person’s public prominence can quickly change, much thanks to social media, Falkenberg said.

Oracle’s cost in fiscal 2015 was for security at Ellison’s residence. Home protection systems can include camera surveillance, pressure pads located near doors or walkways to detect movement, and dense vegetation or crushed gravel that’s noisy to walk on beneath windows to deter intruders, AFIMAC’s Martin said.

“It is important to keep the boss safe, but there comes a point — certainly south of the $1 million mark — where shareholders deserve a far clearer explanation of the risks and provisions and the justification,” said Michael Pryce-Jones, director of corporate governance at CtW Investment Group, which advocates for pension funds that collectively manage $250 billion.

Still, rigorous programs that come with steep costs can be warranted for some, said Paul Viollis, CEO of security provider Viollis Group International.

“It all comes down to having fiduciary responsibility,” Viollis said. “Not providing protection would be like going to the Super Bowl with nobody to block for the quarterback.”

FocusPoint International CEO Greg Pearson quoted in Travel Weekly: Bad news is good news for travel insurance vendors

April 25th, 2016 Comments off

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Terrorist attacks, virus outbreaks and other bad news for the travel industry typically translate into good news for sales of travel insurance. So it’s little surprise that a world in which violence, disease and extreme weather appear to be on the rise is producing steady growth for risk-management products within the retail channel.

In 2008, the U.S. Travel Insurance Association (USTIA) reported via its market survey that Americans had spent just over $1.58 billion on travel insurance the previous year, according to executive director Megan Freedman.

“If we fast forward to 2014, that spend was about $2.2 billion, so a noticeable increase,” Freedman said.

The number of Americans covered by a USTIA member’s plan also increased in that time frame from 28 million to 33.4 million, Freedman said, “so in the number of people covered and the number of dollars they’re spending in the industry, we’re certainly noticing increases.”

The USTIA will conduct its next market survey in 2017, she said, and if the trend continues, sales should be even higher.

Freedman pointed to several factors that are pushing the increase: the economy, the growth in leisure travel in recent years, “and, really, an awareness of the different things that can interrupt your travel — extreme weather, natural disasters, things like that.”

Dean Sivley, president of Berkshire Hathaway Travel Protection, also pointed to growth in the leisure market and the strong U.S. dollar. He, too, said there are spikes in inquiries and sales whenever violence or other troubles are heavily publicized anywhere in the world. In particular, he cited the Brussels terrorist attacks and the increasing spread of the Zika virus.

“There always have been events which do remind people that it’s good to get travel insurance, and you do see spikes,” Sivley said. “But interestingly enough, I don’t think that they’re necessarily lasting effects.”

Typically, he said, Berkshire Hathaway sees “somewhere in the 15% to 20% range in terms of percentage of additional bookings that happen during those periods,” increases that tend to last for a few months.

Daniel Durazo, director of communications for Allianz Global Assistance, said bumps in inquiries and sales are largely driven by media coverage.

“It’s the crisis of the moment that drives a lot of interest in travel insurance, and there will be a next crisis,” Durazo said.

Isaac Cymrot, vice president of industry relations with Travel Insured International, agreed: “Anytime there’s something that’s perceived negatively in the world that could impact travel, it’s going to have a positive effect on our business because people are naturally better in tune to, ‘If I want to go, I’m going to be protected.’ ”

To be sure, negative events are not solely responsible for spikes in business. Insurers are already anticipating an increase in U.S. travelers headed to Cuba as travel restrictions to the country are loosened.

“We see a direct correlation between the type of trip people take and the percentage of people who take insurance,” said Beth Godlin, president of Aon Affinity Travel Practice. “So the more exotic or risky the location is, or the more underdeveloped the medical infrastructure is, the higher the percentage of people who take insurance.”

Insurers said they also felt their industry was growing because of a better general awareness of travel insurance among U.S. consumers, not just as a result of spikes caused by global events.

“Travel insurance is available in many more places than it ever was before, so there’s a much higher degree of awareness of the product and the value,” Godlin said. “Because of that — because of the sheer sort of exponential increase in distribution points for the product — more people are seeing it, more people are buying it.”

In addition, Jason Schreier, U.S. CEO of April Travel Protection, attributed an increase in the amount of insurance sold to a “heightened awareness” of insurance. He said education about what insurance can do for travelers is important, especially in the U.S., where travelers traditionally buy travel insurance less than in other markets.

Robert Gallagher, COO of AIG Travel, agreed. Within the U.S. specifically, he said, “education and awareness about the value of travel insurance is a key marketing objective for us.”

Companies that are focused more on travel risk management are seeing increases in business, too. For example, On Call International’s chief security officer, Jim Hutton, said the company is seeing increases of 30% year over year in requests for information about both insurance and risk-management services, particularly in the security, political and natural disaster coverage realms.

FocusPoint International, a security and risk-management firm, targets business travelers, but has seen an increase in leisure travelers recently, CEO Greg Pearson said. This time last year the company had about 10% leisure clients, but that is expected to grow to 30% by the end of 2016, with an end goal of a 40/60 leisure-business mix.

The value of travel insurance is not lost on agents, who often recommend the product to their customers.

Kimberly Wilson Wetty of Valerie Wilson Travel said, “The best advice we give our travelers is to buy insurance and protect their investment.”

AFIMAC Global in Canadian HR Report: Hunting for Clues Online

April 19th, 2016 Comments off

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HuntingForCluesOnline

Reprinted by permission of Canadian HR Reporter.
© Copyright Thomson Reuters Canada Ltd., April 4, 2016, Toronto, Ontario.
1-800-387-5164. Web: www.hrreporter.com

Where We’ll Be in April

April 7th, 2016 Comments off
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