CEO $1 club
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Marketplace’s Kai Ryssdal goes one-on-one with leaders of some of the world’s great companies to talk about what drives them, what their passions are, how they look at the world — and how they put it all together in a way that adds up to success.
KAI RYSSDAL: You want to know what else you can get for a dollar? How about the services of Steve Jobs. Apple’s CEO? Or Yahoo’s Terry Semel? For three bucks you can get Sergey Brin, Larry Page and Eric Schmidt all rolled up into one. Brin and Page founded Google. Schmidt’s the CEO. All of them are part of a growing number of CEOs who work for a buck a year. But former CEO and commentator Carl Yankowski says the Dollar Club isn’t really that much of a bargain.
CARL YANKOWSKI: One-dollar CEOs belong to the club of the fabulously rich. And that’s where the buck should stop, but often doesn’t.
Agreeing to take just a buck in salary means a CEO believes in himself. And, he believes in that company so much it shouldn’t be any problem to turn it around.
No question, the $1 salary is good personal marketing that’s worth a fortune in publicity. And it’s true that the $1 salary gives new CEOs a longer leash to take risks to improve things, no doubt about it.
But let’s not be fooled. It can also be very misleading, plain and simple. Behind the scenes, many of these CEOs are simply capitalizing on major compensation that the public rarely hears about.
Sooner or later, compensation committees and boards routinely offer huge long-term incentives connected to company performance to people foregoing a salary. Now, it usually comes in the form of stock or stock options, but sometimes other tangible assets like jets or homes.
But any CEO willing to accept a buck in payment has declared that they’ve already reached a personal wealth threshold. He or she doesn’t need more compensation — either short- or long-term.
So, in the new age of philanthropists, like Gates and Buffett, the hidden stories beyond the $1 pay take on a new meaning. And if you ask me, any CEO who takes a one-dollar salary should also return all future longer-term compensation back to society. Right up front, any self-respecting $1 CEO can easily pledge that compensation to corporate reinvestment, new job creation, or a charity or cause of their choice.
Or, compensation committees and boards can simply make that a rule. Now it’s time to consider at least some oversight or approval by the company and its shareholders over the longer-term pay of $1 CEOs.
After all, it’s typically consumers, employees and the shareholders who helped generate that fabulous wealth in the first place.
RYSSDAL: Carl Yankowski runs the Westerham Group. That’s a consulting firm. He’s also the former CEO of Palm. As in the Palm Pilot. And he’s the former president of Sony Electronics.