PERK HOGS.(The Talk of the Town)(long-term stock performance of perk-laden firms is much worse than that of firms that eschew executive perks)

In the 1957 comedy "Will Success Spoil Rock Hunter?" the late Tony Randall played an adman yearning to ascend the corporate ladder. Rock Hunter wants more authority and a higher salary, of course, but he's really after something more tangible: the key to the executive washroom. It is finally bestowed on him with all the pomp of a coronation, and as he catches his first glimpse of the inner sanctum he exclaims, "Oh, the beauty of it all!"

The perks have changed since then-- the washroom now comes with a Gulfstream V--but the zeal with which executives cling to them has not. At most large American companies, rank still has its privileges; the big shots need not trouble themselves with paying for the things that their immense salaries are supposed to enable them to afford. Park Avenue duplexes, burglar alarms, floral arrangements, a lifetime of all-you-can-eat at Jean Georges: it's good to be the king. Though some of the more flagrant perk abusers, such as Dennis Kozlowski, of Tyco, have been in trouble recently, the appetite for fringe benefits has not diminished. Now that companies are lavishing free stuff on C.E.O.s even after they retire, one can only assume that, as soon as it becomes possible, enterprising executives will be locking up perks in the afterlife.

Twenty years ago, perks seemed to be going the way of three-Martini lunches and three-piece suits. In the seventies and eighties, as the old-line American corporate giants floundered in the face of competition from Japan, Germany, and Silicon Valley, an assemblage of economists, big investors, and takeover artists sparked a backlash against pampered chief executives. The model perk hog was Ross Johnson, the C.E.O. of RJR Nabisco, who once sent a company jet to fetch his dog Rocco from Palm Springs, listing him on the manifest as G. Shepherd. (Johnson belonged to twenty-four country clubs, all of them paid for by his shareholders.) Everyone--at least, everyone outside the executive suite--seemed to agree that corporate America was due for a dose of market medicine. Perks did not fit into the notion that pay should reflect an executive's performance, not his station. As the economists Michael Jensen and Kevin Murphy put it, C.E.O.s needed to act less like bureaucrats and more like entrepreneurs. They'd have the chance to get richer than ever, but only if they made shareholders rich, too.

Along the way, the plan changed. Pay did grow, as companies learned to use stock options to boost bonuses, but so did the taste for perks. In the fifties, companies had relied on country-club memberships and vast corner offices to make up for the relatively low salaries they were paying their executives, in part because high income taxes made big paychecks impractical. So maybe you got a car instead of a raise. These days, though, you get the car and the raise, plus the company pays your taxes, your dry-cleaning bills, and your kids' tuition.

In a world where multimillion-dollar ...