While salaries of top-companies’ CEOs set many tongues wagging, Mark Zuckerberg, the CEO and founder of Facebook, one of the most futuristic companies, draws a meager salary of $1 per year. Yes, that’s right. Not just this, he also denies himself any bonus, new stock options or new equity awards.
Joined the $1 per year club in 2013
In 2013, Mark Zuckerberg announced that he is giving up his salary and will only be drawing $1 per year in the capacity of Facebook’s CEO. While answering a question in one of his Q&A; sessions on Facebook he said:
“I’ve made enough money. At this point, I’m just focused on making sure I do the most possible good with what I have. The main way I can help is through Facebook — giving people the power to share and connecting the world. I’m also focusing on my education and health philanthropy work outside of Facebook as well. Too many people die unnecessarily and don’t get the opportunities they deserve. There are lots of things in the world that need to get fixed and I’m just lucky to have the chance to work on fixing some of them.”
Others CEOs who draw a base pay of $1 are Hewlett-Packard’s Meg Whitman, Oracle’s Larry Ellison and Google co-founder Larry Page.
History behind $1 salary
The US economy was sagging during the times of World War 1, World War 2 and the Korean War. During this time, there were many businessmen and government officials who came forward to help the government mobilise and run the American industries. Since the US law does not allow the government to deploy people who give services for free, the concept of $1 salary was born. They were paid a nominal salary of $1 ratifying their legal employment with the government.
Nominal salary a marketing stunt?
While the token salary drawn by the CEOs of top companies is seen as a generous act, what it actually entails is something not many are aware of.
Paul Hodgson, an expert on executive compensation, says that $1 salary is usually “for altruistic reasons with a little PR thrown in.” He adds that this also carries a message from the CEO that “I’m not getting paid until the shareholders get paid.”
Acts of philanthropy
The spirit behind $1 salary is much welcomed. Additionally, Zuckerberg does not shy away from making generous donations for various causes including education, technological innovation, community development and immigration reform. This includes the much talked about donation of $100 million to the Newark Schools.
So how is he a billionaire?
Well, his base salary may have reduced to $1 per year, Zuckerberg holds shares of worth $27 billion in Facebook. Additionally, the company spends a huge chunk of money on his travel and security, which is obviously quite justified!