Why CEOs Take $1 Salary | Why do CEOs take a one-dollar annual salary? While many executives are criticized for their exorbitant salaries, some CEOs have been able to get around the problem by forgoing a high salary and opting for paychecks of about $1 a year or less. Of course, that’s not to say that these executives are living off the dollar menu. The CEOs on this list are still worth millions, if not billions. But some pay lip service to the $1 salary club with hefty compensation in the form of company stock awards and bonuses. While others forgo adding to their wealth altogether.
Recent reporting by Business Insider’s Andy Kearse illustrates just how complicated CEO pay has become. Kearse reported findings from The New York Times’ ranking of the highest-paid CEOs. Which listed Elon Musk’s extraordinary $2.3 billion pay package. Kearse also reported that Tesla reached out to Business Insider to dispute the claim, saying its CEO earned $0. In a Q&A at Facebook in 2015, founder and CEO Mark Zuckerberg said, “I’ve made enough money. Right now, I’m focused on making sure I do the most good with what I have.” Zuckerberg chose to take home a $1 salary and declined stock awards and bonuses; Fellow social media giant Jack Dorsey follows the same rule.
What is a $1 salary club?
Sometimes people want to work without direct payment but cannot do so due to legal restrictions; Also, they cannot engage as volunteers. In such cases, they are paid above zero to distinguish them from volunteers, and they receive a $1 salary as a courtesy. Many top officials in large companies and governments work for a salary of $1.
The idea originated in the early 1900s when many industrial leaders in the United States wanted to offer their services to the government during World War II. For legal reasons they could not join as volunteers. Hence, they take a salary of $1 per year. In the late 1990s and early 2000s, more and more corporate CEOs began accepting one-dollar salaries, often in situations where the company was struggling or when starting a venture.
Why do some of the top CEOs take a $1 salary?
In recent years, the trend of CEOs taking $1 salary has increased While there are many reasons why CEOs might take this approach, there are four main reasons that seem to stand out the most. The first reason is that it can help build trust with employees and shareholders.
The second reason is that it can help reduce stress and improve focus. And the third reason is that it can help send a message about the company’s priorities. The last reason is that CEOs want to avoid taxes. However, taking a $1 salary does not mean they are earning less. Alternative compensation such as stock/equity is more beneficial than regular high-salary pay.
History of $1 Salary
This thing started in the early 1900s when the whole world was in a war-torn zone. During World War II, some top business leaders decided to offer their services to the government for free. Since there was a law, which did not allow the president to accept free services from businessmen, the idea of a dollar salary was born. 1978 also saw Chrysler Corporation CEO Lee Iacocca adopt this approach to improve his company’s condition after the oil crisis, asking the government for their help.
CEOs who are a part of the $1 salary club
Mark Zuckerberg earned a salary of $770,000 excluding bonuses. However, he requested an annual wage of $1 in 2013, making him the lowest paid Facebook employee. He is not doing this alone. Others include Google’s Larry Page and Sergey Brin, Oracle’s Larry Ellison, and even Meg Whitman from HP. Even Steve Jobs cut his salary to $1 a year for over a decade. Other big shots taking a $1 salary include:
- Elon Musk, CEO and CO-founder of Tesla
- Richard Hayne, the CEO of Urban Outfitters
- Richard ‘Gas Man’ Kinder
- Jack Dorsey, CEO of Twitter
- David Filo, the founder of CEO of Yahoo!
- Robert Duggan, the CEO of Pharmacyclics
- Evan Spiegel, CEO, and CO-founder of Snap Inc.
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