4
Facebook's Zuckerberg to take a salary cut
Facebook CEO Mark Zuckerberg speaks during a news conference at Facebook headquarters July 6, 2011 in Palo Alto, Calif. Facebook reported that Zuckerberg will take in only $1 for salary next year.
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
Tess Vigeland: Here's something I never thought I'd say: Next year, I'm likely to earn a bigger salary than Mark Zuckerberg.
In the papers Facebook filed yesterday, the company revealed that Zuckerberg asked for -- and was granted -- a pay cut. From a base salary of about a half a million dollars this year, to just one measly dollar in 2013.
Of course, he still owns the biggest chunk of Facebook stock. Why is 'the hoodied one' joining the pantheon of dollar CEOs? Marketplace's Stacey Vanek Smith takes a look.
Stacey Vanek Smith: Back in 1978, Lee Iacocca took the helm of a struggling Chrysler and said would only earn a dollar a year. A modern American tradition was born: Apple's Steve Jobs, Google's Larry Page, Whole Food's John Mackey.
Sure, these guys had more money than they could probably ever spend, but why not get paid for your work? Caitlan Zaloom is a cultural anthropologist at NYU.
Caitlan Zaloom: The dollar salary is as a kind of pact with the workers. You're throwing yourself in with the fates of your employees.
If a CEO only gets paid in stock, his fate and the company's fate are fused.
That is not what's going on at Facebook. Zaloom thinks Zuckerberg's salary decision has a lot more to do with the uncomfortable nature of the product he sells -- namely us and the information we hand over. He doesn't want there to be a direct connection between that and his money.
Zaloom: By saying, I'm only going to take a dollar, that is actually saying: I'm not even going to acknowledge that your labor is adding to my wealth.
Or maybe the message is that wealth is beside the point, says James Fowler, a social media expert at the University of San Diego.
James Fowler: The message is: That Facebook is not about the money, it's about other things.
Fowler points out the dollar-salary club is chock full of tech CEOs. The message: Silicon Valley isn't Wall Street. Its goals are things like: think different, not be evil and share with friends. And if they happen to make billions of dollars in capital gains, well, so be it.
In New York, I'm Stacey Vanek Smith for Marketplace.
Marketplace's story on Mark Zuckerberg salary reduction from $500,000 to $1 was portrayed as a principled if not idealistic self-sacrifice. The message, we're told, is that Silicon Valley isn't Wall Street. Why no mention that Mr. Zuckerberg will effectively be avoiding paying any income tax at a rate much higher than that paid for capital gains? We're reassured that he has more money than he can possibly spend. So, maybe Mr. Zuckerberg and his pals should donate more of their largesse to the US Treasury to compensate for the tax dodge of paying a lower rate on capital gains. Shame on Marketplace for uncritically painting an image of Mr. Zuckerberg and his Dollar CEOs as possessing such moral rectitude.
If you check Wikipedia
http://en.wikipedia.org/wiki/One-dollar_salary
you'll see that the "modern American tradition" of the $1 a year executive began at least as early as WWI.
And, oh yes, $1 a year is also a way of avoiding FICA and Medicare taxes. In the case of a displaced $499,999.00 salary, as in Zuckerberg's case, this will save both him and his company a $13,871 each annually, a total of $27,743.
Chump change to both Zuckerberg and Facebook to be sure.
But let's now turn that around. That $27,743 is chump change that the rest of us working stiffs have to make up in the form of an annual subsidy to counterbalance Mr. Zuckerberg's free riding on Social Security and Medicare.
Let's say that Mr. Zuckerberg works on these same conditions until he retires at 67 (assuming for the moment that this is the retirement age in 2052 or so, and, in a ridiculously conservative fashion, that the annual cap on wages subject to FICA remains capped at $106,800).
That would mean that over the next 40 years or so, in constant 2012 dollars, we middle class taxpayers will have had the privilege of subsidizing Social Security and Medicare to the tune of $1,109,728 to make up for Mr. Zuckerberg's non-contributions.
Sort of makes Mr. Fowler's comment:
James Fowler: The message is: That Facebook is not about the money, it's about other things.
look like it's somewhere between mind-blitheringly shallow and fatuous.
"And if they happen to make billions of dollars in capital gains, well, so be it."
At least that was thrown in there at the last. In taking a Dollar Salary individuals are signifigantly decreasing the amount of money they will contribute in taxes. This is especially true when the majority of their income is derived from investments that are taxed at ridiculously low rates (14-16%). Taking a buck doesn't seem all that benevolent to me, perhaps I'm just cynical though.
Really.....It is a great post! I just want to say thanks for the information you shared. keep it up.http://www.xtremepicks.com/
