It might sound uncanny, but it is true: CEOs and former CEOs from major tech companies have or had salaries of just $1. Yes, Elon Musk (Tesla), Jeremy Stoppelman (Yelp), Larry Ellison (Oracle), Meg Whitman (HP), and Steve Jobs (Apple) earn or earned paychecks of just one dollar a month. Don’t believe us? Check out some of these stories:
- Evan Spiegel (CEO, Snapchat)
- Jack Dorsey (CEO, Twitter)
- Larry Page (CEO, Alphabet)
- Mark Zuckerberg (CEO, Facebook)
These are all part of a meaningful number of high-profile executives on some of America’s top companies that have reduced their cash salaries to a single dollar. Or, better yet, to about 93 cents (after taxes). Here’s why.
Why do top execs of tech companies earn $1 salaries?
If you’re C-level at a listed company, the symbolic paycheck reduction might be well-seen by shareholders and investors, while also serving as an example for other employees further down the org chart. This positioning has been strategic not only in crisis scenarios but also during not-so-notorious rough patches.
The first round of $1 executives in the tech sector came about the dot-com crash of the early 2000s, with James Barksdale (Netscape), John Chambers (Cisco), Larry Ellison (Oracle), and Tom Siebel (Siebel Systems) following Steve Jobs (Apple)’s cue. Mid-decade, it had become such a trend that it became more of a status symbol than an altruistic positioning, said the Los Angeles Times.
However, it would be naive to believe that these salary cuts did, indeed, impact purchasing power. Truth is, most $1 CEO Club members earn their income from other sources not directly linked to cash, such as stock options and bonuses. Thus, their net worth is far larger than the payroll would have it.
Why is the $1 CEO Club a thing?
At a personal level, this alternative form of compensation is far more beneficial than the salary they do sacrifice. Or, as put by The Hustle: “CEOs who take a $1 salary can afford to do so because they tend to be extraordinarily wealthy: 30% are on the Forbes 400 list of richest Americans, and the majority of them retain a much higher equity stake in their company than non-$1 salary CEOs.”
In fact, the article points out that for every $610k in salary but gains $2m in other “not-so-visible forms of equity-based compensation”. Another interesting find is that such arrangements have a tenure of about three years – which is already enough to make several million. At these figures, one can verify these are not startup CEOs.
In case you’re curious: where did the $1 CEO salary come from?
During World War II, everyone was expected to keep the American economy mobilize, including entrepreneurs and business leaders. Philip Reed (General Electric) and William S. Knudsen (General Motors) offered free services for the government, but since volunteering was forbidden, they settled for $1 rates instead, becoming known as the dollar-a-year men. Regardless of the motivation, the tradition carries on.