Mark Zuckerberg and other CEOs Making $1 Per Year
Baku, April 30 (AZERTAC). Along with official launch of Facebook`s IPO Wednesday came the news that CEO Mark Zuckerberg would be reducing his annual salary to just one dollar beginning next year -- and he`s far from the first such CEO to make that decision.
That`s not to say they`re all working for nothing. Due to stock options and awards, CEOs who cut their salaries to a single dollar (or less) often make just as much as most others once accounting for equity, according to a March 2011 study from the Fisher College of Business. The study examined 50 CEOs making a buck or less ever year from 1992 to 2005 and found that due to stock options and other awards, dollar CEOs on average still netted $2 million in other compensation while giving up a median salary of $610,000.
Mark Zuckerberg, for example, owns 28.2 percent of a company expected to be worth $75 and $100 billion. At those levels, a couple hundred thousands dollars is just chump change.
And then there are the company benefits of the dollar-per-year idea first adopted by Chrysler`s revered former CEO Lee Iacocca in the late 1970s. Any CEO whose compensation is so deeply rooted in stock performance has a personal incentive to raise that stock`s price, according to FORTUNE. Another study of dollar CEO compensation also found the announcement of the pay cut can often produce "significant positive short-term market reaction."
But while executives like Google`s Larry Page and New York City`s Mayor Michael Bloomberg have maintained dollar salaries for years, others have used it during times of crisis. Citigroup CEO Vikram Pandit voluntarily lowered his salary to a single dollar in the aftermath of the financial crisis, for example.
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