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.
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.”
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.