6.10.2007

How About a $1 Salary?

Here's an interesting article about CEO salaries. Many CEOs receive only $1 per salary per year. The first inclination is that they are very benevolent and love their company or that they are so personally wealthy that they can afford to do their job for free.

Not quite.

According to the AP article: "Of the 386 Standard & Poor's 500 CEOs whose companies reported under the Securities and Exchange Commission's expanded disclosure requirements this year, salary accounted for only 9.5 percent of total pay"

Where does the rest of this derived value come from? Stock options. These little beauties let a person purchase stock at a pre-determined discount price from the current going rate. This adds up to millions for these CEOs. Is that a good idea? Depends on your perspective. For successful companies it can be easily argued that the leaders of company put the company in position for success, so the CEOs deserve high payment as a reward. On the other hand, if a CEO is leading a company with a plunging stock price, then maybe they're not necessarily earning their pay, but rather collecting a large stock option determined paycheck.

Regardless, it is good to make note that someone taking $1 salary isn't always getting that one dollar per year. It's always good to keep this in mind, what appears transparent on the surface isn't always the case when you go deeper into the situation.

[Photo: Maurice Flower]

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