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Don't Be Fooled by $1 Salaries

sfgate.com — A handful of CEOs in the AP executive pay list take home a salary of $1 a year or less. But all of them manage to make millions anyway, illustrating the point that if you're running the show, your salary doesn't mean much. "Salary has become such a minuscule component of CEO compensation that it is now largely irrelevant."

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  • Porkinsred6, on 10/11/2007, -29/+7This is actually very important because these CEO's could be taking alot more from their company's. Stock options are great and all, but at least their not being greedy. I wish more CEO's took less or no salary. Then they could pay thier employees more or make thier workplace a more comfortable enviroment.
    • str3ama, on 10/11/2007, -0/+19it's basically for tax purposes obviously, although having an investment portfolio still means you have to pay taxes since its considered an income
    • GMorgan, on 10/11/2007, -4/+9Performance related pay is also a good way of ensuring, well, performance. Companies are wary of granting huge salaries and water tight contracts now since we've spent ages seeing company directors getting paid off simply to get rid of them. In the past it was more beneficial to drive the company into the ground and take the golden goodbye than it was to do your job well. Low salaries and high bonuses for directors are a good thing and are of great benefit to the economy.
    • extraspecial, on 10/11/2007, -6/+4@linkedlist, did you read the article? Most of these guys received no salary or bonus, all of their compensation is stock-based, which is tied to company performance.
    • Subvexer, on 10/11/2007, -2/+11It's just more *****, the working guy invariably gets ***** on, doesn't matter what the CEO tells you he's getting for doing whatever it is they do.
    • Saiing, on 10/11/2007, -1/+16"Most of these guys received no salary or bonus, all of their compensation is stock-based, which is tied to company performance."

      Yeah, but the stock plans are worked in such a way that it's practically impossible not to make a huge pile of money, even if the stock price drops.

      I mean, what is it with this "don't be fooled" nonsense anyway. Like anyone actually thinks that Jobs, the Google boys, and other CEOs actually work for a buck a year and that's all they get. Duh... right...
    • HarryHunt, on 10/11/2007, -1/+10So the founders of Google actually make more than $1? Now that comes as a surprise.
    • Monolith3, on 10/11/2007, -1/+21Oh man, thank god someone wrote this article, since i was totally fooled by Steve Jobs' $1 salary! You mean he doesn't live in a cardboard box outside Apple HQ? Amazing!
    • G-RaZoR, on 10/11/2007, -0/+4Yeah everyone needs to quit thinking they are trying to screw Uncle Sam when they take a $1 dollar salary. Any money they make from stocks is still taxable as capital gains. The reason they do this is exactly what philvell said near the bottom, to basically make the shareholders happy. Shareholders don't like seeing a CEO make $15 million a year in salary, and own $100 million in stock options.
    • catalysis, on 10/11/2007, -1/+3Capital gains only apply to the actual gains and not the whole price of the stock
    • vfrex, on 10/11/2007, -4/+0I don't know why shareholders would be thrilled with stock options either. Its dilutive, pushing share prices down.
    • MeNaCe942, on 10/11/2007, -0/+2wait, people were fooled?
  • eksai, on 10/11/2007, -0/+13I actually found this part interesting, apparently these guys have personal bodyguards

    "_ Eric Schmidt, CEO of Google Inc., took home exactly $1 in salary. And his overall compensation totaled $557,466, a fraction of the $71.7 million granted last year to competitor Yahoo Inc. CEO Terry Semel, the No. 1 executive on the AP pay list.

    Almost all of Schmidt's package covered the cost of $532,755 for personal security. Schmidt, along with Google's founders, Larry Page and Sergey Brin, has refused to take anything more than a token paycheck for the past three years to promote an egalitarian spirit at the company."
    • nycmac247, on 10/11/2007, -7/+7" apparently these guys have personal bodyguards"

      yes, as the US becomes more and more of a third world country this is going to be a necessity - for both them along with their families / children.
    • Optimaximal, on 10/11/2007, -0/+4Aren't Google seen as a shining beacon of what a good internet company is? Why would these guys need bodyguards? After all, aren't the paths they walk littered with rose petals?
    • mhockey14221, on 10/11/2007, -2/+7US becoming a third world country?

      I know we have our problems, but seriously...
    • CedEx, on 10/11/2007, -0/+1@ optimaximal

      Bodyguards for preventing kidnapping and ransom.
  • LordSkywalker, on 10/11/2007, -2/+48Oh, I see. So they don't ACTUALLY make only a dollar a year?

    /sarcasm
    • crushfan, on 10/11/2007, -4/+3Hahahahaha.
    • CanIGetAWitness, on 10/11/2007, -1/+2Indeed. I never was fooled by the $1 salary, nor am I fooled that Darth Cheney is no longer working at Halliburton.

      Don't be fooled by an article suggesting that you not be fooled.

  • redrock34, on 10/11/2007, -1/+31What would I rather have, a 35% federal income tax or a 15% capital gains tax?
  • Jonmad17, on 10/11/2007, -12/+1Steve Jobs's salary is only $1.But he is worth 5.7 billion according to wikipedia.
    • linkin1, on 10/11/2007, -19/+4he doesn't worth crap, greedy bastard.
    • Xanium4332, on 10/11/2007, -2/+17I bet he can speak english though...
    • quietcynic, on 10/11/2007, -6/+26Explain to me again how it's greedy to reap the benefits of a corporation you built up from scratch?
    • Optimaximal, on 10/11/2007, -5/+2I didn't think Steve Jobs *really* built Apple from scratch, more 'he started the company, bailed when it stopped being a money spinner, created a rival product then convinced the current incumbants to buy into his new product and give him his CEO job back'...
    • Rice, on 10/11/2007, -0/+4Bailed? He was ousted.
  • Error601, on 10/11/2007, -6/+2Fooled? As if it's some secret conspiracy. You have to be kind of a loser have a stick up your ass about what someone else makes anyway.
    • philvell, on 10/11/2007, -1/+7its not really about reducing their tax liabilities.

      What its really about is trying to align the goals of the CEO's and directors with the goals of the shareholders. This is by bonding them to the company, and making these people actual shareholders with significant interests in the companies that they're governing therefore hopefully making sure that decisions made will be in the best interests of the companies noted.
    • zybch, on 10/11/2007, -0/+1Problem is though, that as soon as just about ANY company goes public and the bosses have to answer to shareholders, their clients get royally screwed, with higher prices, lower quality and an added injection of arrogance towards them!
    • GawtMilk, on 10/11/2007, -1/+2It's still about making money. By accepting a $1 salary, you're telling a shareholder, "I trust this company!". That makes you money.

      There was a man on the board of directors of Wall Street, who learned that the stocks were failling, on the verge of the Great Depression. He immedeatly went and BOUGHT stocks, as if to show people that things were okay. His stocks all tanked, as he foresaw, but in reality it saved him money because the shareholders thought, "Hey, things look like they're going well".
  • wiihateeveryone, on 10/11/2007, -5/+1I realize these guys make more than $1 a year but isn't this token payment still under the minimum wage?
    • GMorgan, on 10/11/2007, -0/+1Bonuses are deductible against minimum wage. At least they are in the UK.
    • KawaiChik, on 10/11/2007, -0/+1Servers are paid under minimum wage. They are paid enough to cover taxes, what you pay them is what they get.
    • 15charmaxwtf, on 10/11/2007, -3/+1Hmm, perhaps charities who hire volunteers are breaking the law ;P
  • firsttube, on 10/11/2007, -5/+2"Salary has become such a minuscule component of... compensation that it is now largely irrelevant."

    Kinda like our President?
  • mikeymondavi, on 10/11/2007, -1/+4It's amazing to me that to escape one of the most achievement punishing tax systems, CEO's engage in this type of practice to begin with. If they try to decrease their taxable income, they're greedy bastards or "make too much money" then when you find a way to get to their money, they pick up and move over seas in which they're called "corporate Benedict Arnold's".

    Then again, people never accuse others of greed for wanting someone elses money or assets, they only accuse the ones who want to keep their own.
    • humpingmonkey, on 10/11/2007, -0/+2Be very skeptical of the intellectual integrity of anyone who uses the un-objectively definable adjective *greed*.
    • nreisan, on 10/11/2007, -0/+3taking 1 dollar salaries is not about tax evasion

      im not saying they dont want to get rich

      but they get rich from the stock options

    • mikeymondavi, on 10/11/2007, -1/+4Sure it is. And i would say tax evasion as much as its the defense of their private property from the unlawful plunder of the masses. Not to mention, what's wrong with being rich and enjoying the fruits of your hard work. Jobs busted his ass to achieve what he's got, and he didn't always succeed in all of his endeavors (ie Next) so who's to say that he shouldn't enjoy it without having to worry about hiding it or not taking it instead choosing to decrease his tax penalty? Sounds a lot like class hatred to me.
  • Kronos6948, on 10/11/2007, -1/+2Funny the article doesn't mention the all powerful John Mackie of Whole Foods. He started to take a $1 salary last year. Meanwhile, his employees get paid less than what other supermarkets pay for their employees (at least for skilled labor like meat cutters/butchers like myself). Plus, there's no union for us in Whole Foods. We also have an incentive based pay system, where if our department makes more money that month than what we're set to do, we get a portion of that in our pay. Still doesn't equate to what other supermarkets pay out. If I had known this earlier, I would've went to other supermarkets first before going to Whole Foods, and hence is the reason why I'm shopping myself around currently.
    • Skooma714, on 10/11/2007, -0/+1Really? I was considering working there because there is no union. I used to work at Safeway but the union took 26% of my earning and gave me *****-all in return.

    • Kronos6948, on 10/11/2007, -0/+1@Skooma...

      Consider this:

      The top pay for a meat cutter is $18.75 an hour. Compare that with the base salary of an Apprentice meat cutter, and you get the same amount. Once you pass your apprenticeship, it's usually around $21 to START as a meat cutter.
  • phillockwood, on 10/11/2007, -0/+1Check back for another insightful article by this source: "Many Columbian Drug Traffickers with U.S. Sales Presence Not Paying U.S. Taxes." I almost thought this was the Onion, not SFGate.
  • dmitry, on 10/11/2007, -0/+1Well I think that the point of doing that is to say "I know I make a lot of money from investments, I don't need to take money from the payroll"
  • Spandia, on 10/11/2007, -0/+4Boy was I suprised, all these years I thought they lived in crates
  • databoy, on 10/11/2007, -4/+1Boys, you have it all wrong. $1 per annum is the minimum wage for contractual purposes. Shares are market driven speculative stock; they have no relationship on the performance of the company. You pay tax on the shares upon the sale of the shares not while you hold them. With fully franked shares the tax is paid by the company, not by the individual. The guys who work in the executive positions are married to the company; they have no life. You are welcome to apply for the position if you are good enough. The problem with the people complaining is that they have no business skills and no technical skills otherwise you would not be talking a lot of *****. At the executive level it is dog eat dog; fall over and there is another 20 vultures ready to knife you in the back.
    • chili555, on 10/11/2007, -0/+3"...have no relationship on the performance of the company." I don't agree. If a CEO increases sales, increases net profit, reduces expenses and reduces debt, the speculators will certainly drive up the price of the stock. Pay that CEO $1 and give him options tied to _increases_ in shareholder value and you have a motivated CEO. Most shareholders would say if the CEO increased shareholder value by $150 million and you granted stock options worth $2 million, the CEO was worth every cent.

      What's just wrong is the CEO's who get a huge salary, huge bonus and a huge pay raise when shareholder value erodes year after year. How the Board and shareholders tolerate this is beyond me.
    • medialady, on 10/11/2007, -2/+0So, databoy, the money the CEOs received are tax-free. I have no problem with CEOs earning millions on top of millions. If they have the knowledge, skill, money, and network power to get the jobs done, then they deserve that extra money.
    • optigon, on 10/11/2007, -0/+1This is useful for the stockholders because the CEO has a vested interest in the company's future. It may not drive up or down the stock price, but it means the CEO will work a lot harder as a major stockholder in the company, rather than just another salaried employee.
  • superdigg, on 10/11/2007, -0/+6"Don't be fooled"? I don't think there's a single person out there that actually thought Google's Eric Schmidt lived on only a dollar a year.
    • MaximegalonInfo, on 10/11/2007, -0/+1Exactly, what a dumbass title. Thanks for the info Captain Obvious.
  • meshman, on 10/11/2007, -0/+1As one of my bosses said to me once, "I don't need the job or the money, I can make more day trading than they'd pay me here."
  • knulpm, on 10/11/2007, -0/+1Also, don't be fooled by the Tooth Fairy. It's all a scam by your parents!
  • tdtmmttdt, on 10/11/2007, -0/+0Hmmmm....my dad's a CEO and he recently told me he can't help me with my college tuition....
    I think I'll send him this article....
  • aeproberts, on 10/11/2007, -0/+1This is lame....since when is this news. Did you really think these guys would be working for $1? Of course there is millions in stock options....this is America the home of capitalism.
  • origclubsoda, on 10/11/2007, -0/+1The point of the $1 salary is to be a gesture of good faith... its not a budget solution.

    Salesmen often have zero salary because they make money on commission.n
  • salinemist, on 10/11/2007, -0/+1This trend started under the Clinton administration with the change in Section 162(m) of the IRS code:

    http://www.businessweek.com/magazine/content/06_48/b4011079.htm?chan=search

    You can't beat the free market. The United States has the strongest economy in the world with opportunity and success out there for anyone who wants to work for it, and if the pseudo-socialists with an armchair degree in economics would stop messing with it we'd all be better off.
  • pjam3, on 10/11/2007, -0/+0Aren't many of these CEO's, including Steve Jobs also the same ones who received back dated stock options. Yeah that's a shining star in the making for you. This arcticle is pointless. If you didn't already know this, you need to climb out from the rock you climbed under.

    I mean gee, Governor's, Presidents, and Politicians spend millions and millions of dollars running for jobs that pay less than 250K per year. Yeah CEOs spend tons of time moving up the ladder or forming companies that make billions so they can earn $1 per year. Who really cares.... the only issue I have are CEOs who take companies into the ground, fire half the workforce, then "resign" and receive some kind of exit package worth around 50 million dollars plus stocks after destroying a company. Now that's a major problem.
  • stealthc, on 10/11/2007, -0/+1Of course the regular worker gets ***** on. It's the IRS that ***** on him, because he can't afford to insulate himself from the madness the way a CEO can.
  • acidguy02, on 10/11/2007, -0/+0hahahaha XD!!!, who is gonna win a $1 salary. they got to the next level, instead of money they get plenty of growing stock shares.

    personally i dont care what they earn because thats gonna brings me nothing good. instead of that i am focused on getting more money extra :
    check out this site. easily and being a little smart i am winning some money and at least covering the higs prices of gas, here it goes for someone who can make it usefull.

    http://adbux.org/?r=acidguy
  • kingmike82, on 10/11/2007, -0/+0This is a great article. They have been getting away with that for a while!
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