There are only a few executives in the $1 salary club. No, that isn’t a typo. I mean $1.00, as in one, single dollar per year salary.
The three at the top of Google, Larry Page, Sergey Brin, and C.E.O. Eric Schmidt have affirmed their cachet in corporate cool by taking salaries of only $1, according to the proxy statement the company filed on Tuesday evening. Their vast holdings of Google shares may have taken a hit in value, tumbling 35 percent from its highs last fall, but the three executives are sticking with their one-buck pay stub.
It’s a request they first made in those wide-eyed days of 2004, when Google went public. Since then, Google says in its filing, “we offered each of them market-competitive salaries at the beginning of each of 2005, 2006, 2007, and 2008.” They rejected those offers.
Steve Jobs of Apple is the most famous, receiving only $1 in annual salary since he rejoined the company in 1997. That may soon be changing. The Apple board said in January that “because Mr. Jobs’s continued leadership is critical to the company, the compensation committee is considering additional compensation arrangements for him.” Jobs, to be sure, owns 5.5 million shares of Apple.
Likewise, Bill Ford, who agreed in May 2005 to forgo all salary and bonuses until Ford Motor’s auto business “has achieved sustainable profitability” may soon be getting a new deal. That isn’t because Ford is suddenly profitable. The board disclosed late last month it is was planning to change its chairman’s comp. “It is not reasonable to expect Mr. Ford to continue these valuable efforts on an uncompensated basis, particularly after he has received no compensation for nearly three years,” the company said.
No change is expected for Richard Fairbanks, the chief executive of the credit card giant Capital One, who received nothing in salary for 2007. (He did receive $26.7 million in stock options as well as other compensation, according to a company filing.)
Taking no or little salary is often done for symbolic reasons: an executive trying to bolster employee morale at a company in need of an immediate turnaround. But there is a practical motive as well. Salary is taxed at rates as high as 35 percent, while capital gains from stock sales are taxed up to 15 percent. Cutting down the salary portion of an executive’s compensation could help reduce the overall tax bill.
Then there is Whole Foods, a company where an executive like Robert Nardelli would not feel at home. Whole Foods’s proxy says its compensation and benefit programs “reflect the company’s philosophy of egalitarianism.” For executives, there is a salary cap of $631,500, which represents 19 times the average annual salary at the company. It is in that spirit that John Mackey, the founder and chief executive of Whole Foods, who came under fire last year for his anonymous internet posts, voluntarily reduced his annual salary to $1 in November 2006.
“I am now 53 years old, and I have reached a place in my life where I no longer want to work for money, but simply for the joy of the work itself and to better answer the call to service that I feel so clearly in my own heart,” he said at the time.
Does this news almost makes you want to take a dollar out of your wallet and hand it to the first executive who passes by?