Mark Zuckerberg, Evan Spiegel, Jack Dorsey and others are following the example of the late Steve Jobs and taking $1 annual salaries
In Silicon Valley, making a buck a year is the hottest thing since the last Tesla model. And that’s something Elon Musk’s rivals could learn from.
Ford is under fire after announcing plans this week to cut its global workforce by 10%, or up to 20,000 jobs. Shareholders are unhappy at the Michigan carmaker’s low stock price, but Ford chief executive Mark Fields is still making big bucks. In 2016, he took home $1.78 million in salary, up from $1.62 million in 2014.
That’s way more than $1, or the annual paycheck drawn by the bigwigs behind some of American tech’s biggest names. They include Snap Inc’s Evan Spiegel, Twitter and Square head Jack Dorsey, Alphabet’s Larry Page and Sergey Brin, Facebook’s Mark Zuckerberg and others who aren’t anywhere near the poorhouse. Tesla chief Musk gets paid the California minimum wage but doesn’t accept it.
“They tend to be company founders or employees who are well-vested in stock,” says Dan Marcec, editorial content director at Equilar, which tracks CEO compensation. “They don’t believe they need additional compensation because they already have skin in the game.”
Contemporary tech titans are following the model of Steve Jobs, who accepted a token $1 as salary from the moment he returned to Apple as interim chief executive in 1997 until his departure for health reasons in 2011. While the likes of Warren Buffett, Whole Foods CEO John Mackey and Donald Trump also take little or no salaried compensation at all, it’s a move that’s most prevalent in the tech world. That’s because many firms there are still run by their founders or those who got in early and accrued plenty of stock. “The companies are very high growth and there’s a lot of competition out there, so it really incentivizes CEOs,” says Marcec.
Even apart from stock options, these honchos are richly compensated. For decades, Buffett has accepted a yearly $100,000 salary from Berkshire Hathaway. But since 2007, his investment holding company has spent between $300,000 to $400,000 annually on his private security, company filings show. Before his death, Apple also paid for Steve Jobs’ use of a Gulfstream V private jet.
Rank-and-file employees with little stock compensation can also be moved to work harder by the very act of chief executives not taking direct compensation. Twitter’s Dorsey, for instance used it as a motivational tool upon his return to the troubled social media giant. Jensen Huang of chipmaker Nvidia dipped his salary to $1 for two years when his company was slashing costs. “Part of the reason CEOs do this is because they want employees to see that they just want the company to do well,” says Marcec. “They want to motivate the employees in this way.”
Of course, that applies even if you’re a small business or non-listed company. After all, there’s nothing to stop you from applying the same principles of structuring compensation so that it’s adjustable based on yearly performance, instead of merely paying out a fixed sum.
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