One-dollar salary
Encyclopedia
Several top executives in large businesses receive a salary of one dollar. In place of a salary, the executives receive stock options. In the United States, this approach impacts personal tax
liability
because although stock and option grants are taxed at federal income rates, they are exempt from payroll tax
es (typically around 15%) used to fund Social Security
and Medicare
.
Executives argue that remuneration through stock instead of salary ties management performance to their financial benefits. The assumption is that stock prices will reflect the actual value of a company, which reflect the management performance of the company. Detractors argue that this incentive may drive short-term planning over long-term planning.
. US law forbids the government from accepting free services from anyone. Therefore, individuals who are effectively volunteering their services have to be paid a nominal salary. Typically these individuals are paid one dollar a year for their work. For example, Massachusetts Governor Alvan T. Fuller
, wealthy in his own right, served in several government positions on such terms.
In Canada
during World War II
, C.D. Howe, Canada's "Minister of Everything
", created a rearmament program using "dollar-a-year men". An example was John Wilson McConnell
, the owner and publisher of the Montreal Star
, who was appointed Director of Licences for the Wartime Trade Board, a position for which he served for free.
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
liability
Legal liability
Legal liability is the legal bound obligation to pay debts.* In law a person is said to be legally liable when they are financially and legally responsible for something. Legal liability concerns both civil law and criminal law. See Strict liability. Under English law, with the passing of the Theft...
because although stock and option grants are taxed at federal income rates, they are exempt from payroll tax
Payroll tax
Payroll tax generally refers to two different kinds of similar taxes. The first kind is a tax that employers are required to withhold from employees' wages, also known as withholding tax, pay-as-you-earn tax , or pay-as-you-go tax...
es (typically around 15%) used to fund Social Security
Social Security (United States)
In the United States, Social Security refers to the federal Old-Age, Survivors, and Disability Insurance program.The original Social Security Act and the current version of the Act, as amended encompass several social welfare and social insurance programs...
and Medicare
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
.
Executives argue that remuneration through stock instead of salary ties management performance to their financial benefits. The assumption is that stock prices will reflect the actual value of a company, which reflect the management performance of the company. Detractors argue that this incentive may drive short-term planning over long-term planning.
Dollar-a-year men
The "Dollar-a-year men" were business executives who helped the government manage the US national economy during periods of war, especially during World War IWorld War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
. US law forbids the government from accepting free services from anyone. Therefore, individuals who are effectively volunteering their services have to be paid a nominal salary. Typically these individuals are paid one dollar a year for their work. For example, Massachusetts Governor Alvan T. Fuller
Alvan T. Fuller
Alvan Tufts Fuller was a United States Representative from Massachusetts. He became one of the wealthiest men in America, with an automobile dealership which in 1920 was recognized as "the world's most successful auto dealership." He was elected a member of the Massachusetts House of...
, wealthy in his own right, served in several government positions on such terms.
In Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
during World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, C.D. Howe, Canada's "Minister of Everything
Minister of Everything
A Minister of Everything, sometimes also called Minister for Everything, refers to a Minister who wields great and wide-reaching power in the government, usually as the head of a powerful and influential ministry , but also can influence government machinery outside his direct control...
", created a rearmament program using "dollar-a-year men". An example was John Wilson McConnell
John Wilson McConnell
John Wilson McConnell was a Canadian businessman, newspaper publisher, humanitarian, and the most significant philanthropist in the history of the province of Quebec, Canada.-Early life:...
, the owner and publisher of the Montreal Star
Montreal Star
The Montreal Star was an English-language Canadian newspaper published in Montreal, Quebec, Canada. It folded in 1979 following an eight-month pressmen's strike....
, who was appointed Director of Licences for the Wartime Trade Board, a position for which he served for free.
Single-digit salary earners
The following people have been listed as having single-digit salaries:- Lee IacoccaLee IacoccaLido Anthony "Lee" Iacocca is an American businessman known for engineering the Mustang, the unsuccessful Ford Pinto, being fired from Ford Motor Company, and his revival of the Chrysler Corporation in the 1980s...
(ChryslerChryslerChrysler Group LLC is a multinational automaker headquartered in Auburn Hills, Michigan, USA. Chrysler was first organized as the Chrysler Corporation in 1925....
Corporation) - Steve JobsSteve JobsSteven Paul Jobs was an American businessman and inventor widely recognized as a charismatic pioneer of the personal computer revolution. He was co-founder, chairman, and chief executive officer of Apple Inc...
(Apple) - Jerry Yang (Yahoo!Yahoo!Yahoo! Inc. is an American multinational internet corporation headquartered in Sunnyvale, California, United States. The company is perhaps best known for its web portal, search engine , Yahoo! Directory, Yahoo! Mail, Yahoo! News, Yahoo! Groups, Yahoo! Answers, advertising, online mapping ,...
) - Sergey BrinSergey BrinSergey Mikhaylovich Brin is a Russian-born American computer scientist and internet entrepreneur who, with Larry Page, co-founded Google, one of the largest internet companies. , his personal wealth is estimated to be $16.7 billion....
(GoogleGoogleGoogle Inc. is an American multinational public corporation invested in Internet search, cloud computing, and advertising technologies. Google hosts and develops a number of Internet-based services and products, and generates profit primarily from advertising through its AdWords program...
) - Larry PageLarry PageLawrence "Larry" Page is an American computer scientist and internet entrepreneur who, with Sergey Brin, is best known as the co-founder of Google. As of April 4, 2011, he is also the chief executive of Google, as announced on January 20, 2011...
(GoogleGoogleGoogle Inc. is an American multinational public corporation invested in Internet search, cloud computing, and advertising technologies. Google hosts and develops a number of Internet-based services and products, and generates profit primarily from advertising through its AdWords program...
) - Eric Schmidt (GoogleGoogleGoogle Inc. is an American multinational public corporation invested in Internet search, cloud computing, and advertising technologies. Google hosts and develops a number of Internet-based services and products, and generates profit primarily from advertising through its AdWords program...
) - Arnold SchwarzeneggerArnold SchwarzeneggerArnold Alois Schwarzenegger is an Austrian-American former professional bodybuilder, actor, businessman, investor, and politician. Schwarzenegger served as the 38th Governor of California from 2003 until 2011....
(former Governor of CaliforniaGovernor of CaliforniaThe Governor of California is the chief executive of the California state government, whose responsibilities include making annual State of the State addresses to the California State Legislature, submitting the budget, and ensuring that state laws are enforced...
) - Michael BloombergMichael BloombergMichael Rubens Bloomberg is the current Mayor of New York City. With a net worth of $19.5 billion in 2011, he is also the 12th-richest person in the United States...
(Mayor of New York CityMayor of New York CityThe Mayor of the City of New York is head of the executive branch of New York City's government. The mayor's office administers all city services, public property, police and fire protection, most public agencies, and enforces all city and state laws within New York City.The budget overseen by the...
) - Henry SamueliHenry SamueliHenry Samueli is co-founder, senior vice president, and chief technology officer of the Broadcom Corporation, owner of the Anaheim Ducks, and a prominent philanthropist in the Orange County, California community. In 2007 Forbes placed Samueli's net worth at $2.3 billion. He currently resides in...
(Broadcom Corporation) - Richard KinderRichard KinderRichard Kinder is the CEO and Chairman of the Board of Kinder Morgan Energy Partners, an energy and pipeline corporation.-Biography:...
(Kinder MorganKinder MorganKinder Morgan, Inc. is an American energy company. It is also, through a subsidiary, the general partner of and owner of many of the interests in Kinder Morgan Energy Partners, a publicly traded pipeline and terminal limited partnership....
), who also does not take any alternative form of compensation (stock options, bonus, etc.) - James Li (Syntax-Brillian)
- Sehat SutardjaSehat SutardjaSehat Sutardja , is the CEO, chairman, and co-founder of Marvell Technology Group. He has been awarded more than 150 patents and is a fellow of IEEE. In 2006, Dr. Sutardja was recognized as the Inventor of the Year by the Silicon Valley Intellectual Property Law Association...
(Marvell Technology GroupMarvell Technology GroupMarvell is an American producer of storage, communications and consumer semiconductor products.Founded in 1995, Marvell Technology Group Ltd. has operations worldwide and approximately 5,700 employees. Marvell’s U.S. operating subsidiary is based in Santa Clara, California and Marvell has...
) - Pantas Sutardja (Marvell Technology GroupMarvell Technology GroupMarvell is an American producer of storage, communications and consumer semiconductor products.Founded in 1995, Marvell Technology Group Ltd. has operations worldwide and approximately 5,700 employees. Marvell’s U.S. operating subsidiary is based in Santa Clara, California and Marvell has...
) - John MackeyJohn Mackey (businessman)John Mackey is an American businessman. He is the CEO of Whole Foods Market which he had co-founded in 1980. Named the Ernst & Young Entrepreneur of the Year in 2003, Mackey is a strong supporter of free market economics...
(Whole Foods MarketWhole Foods MarketWhole Foods Market is a foods supermarket chain based in Austin, Texas which emphasizes "natural and organic products." The company has been ranked among the most socially responsible businesses and placed third on the U.S...
), who also does not take any alternative form of compensation (stock options, bonus, etc.) either. - Meg WhitmanMeg WhitmanMargaret Cushing "Meg" Whitman is an American business executive. She is the President and Chief Executive Officer of Hewlett-Packard. A native of Long Island, New York, she is a graduate of Princeton University and Harvard Business School...
(HP)