Finance:One-dollar salary

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Short description: Nominal salary used in situations where an executive wishes to work without direct compensation

{{multiple image | perrow = 3 | total_width = 500 | align = right | header = Notable earners of one dollar salaries | image1 = President Hoover portrait.jpg | caption1 = Herbert Hoover | image2 = Arnold Schwarzenegger by Gage Skidmore 4.jpg | caption2 = Arnold Schwarzenegger | image3 = Steve Jobs Headshot 2010-CROP (cropped 2).jpg | caption3 = Steve Jobs A number of top executives in large businesses and governments have worked for a one-dollar salary.[1][2][3] One-dollar salaries are used in situations where an executive wishes to work without direct compensation, but for legal reasons must receive a payment above zero, so as to distinguish them from a volunteer. The concept first emerged in the early 1900s, where various leaders of industry in the United States offered their services to the government during times of war. Later, in the late 1990s and early 2000s, many business executives began accepting one-dollar salaries—often in the case of struggling companies or startups—with the potential for further indirect earnings as the result of their ownership of stock. Many choose to reduce their salary so they can avoid income taxes.[4]

Dollar-a-year men

In the early-to-mid-20th century, "dollar-a-year men" were business and government executives who helped the government mobilize and manage American industry during periods of war, notably World War I, World War II, and the Korean War. U.S. law forbids the government from accepting the services of unpaid volunteers.[5] Those employed by the government had to be paid a nominal salary, and the salary establishes their legal relationship as employees of the government.[6] During World War I, about 1,000 such people were employed by the United States.[7] While they received only a dollar in salary from the government, most executives had their salaries paid by the companies.

The first known such employee was Gifford Pinchot, working for Theodore Roosevelt. After Pinchot, the United States Department of Agriculture employed several dollar-a-year men.[8] On June 19, 1933, Frances Perkins, Secretary of Labor appointed a five-member Labor Advisory Board, of whom two members came from the Amalgamated Clothing Workers union, of whom one, Sidney Hillman, was a dollar-a-year man.[9] Progressive lawyer Max Lowenthal was a dollar-a-year man as legal counsel on various congressional committees, befriended U.S. Senator Harry S. Truman, and wound up as a dollar-a-year man in President Truman's cabinet.[citation needed]

World War I

Bernard Baruch was the first businessman employed for a one-dollar salary.[10] World War I, the Advisory Commission to the Council of National Defense was staffed largely by dollar-a-year men, including Bernard Baruch, Robert S. Brookings, and Herbert Bayard Swope.[11]

Interwar

Massachusetts Governor Alvan T. Fuller, wealthy in his own right, served in several government positions on such terms.[citation needed]

New Deal and World War II

Kentucky's Ashland Oil and Refining Company founder and CEO, Paul G. Blazer (1890–1966), served twice as a government salaried dollar-a-year man: from 1933 to 1935 under President Franklin D. Roosevelt's National Recovery Administration on the Code of Fair Competition for the Petroleum Industry[12] as Chairman of the Blazer Committee[13] and a second time during World War II as Chairman of District II Refining for President Roosevelt's Petroleum Administration of War.[14][15] During World War II, socialite Doris Duke worked in a canteen for U.S. sailors in Egypt at such a salary.[16]

In Canada during World War II, C. D. Howe, Canada's "Minister of Everything", created a rearmament program using "dollar-a-year men".[17] 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.[18] Others include E. P. Taylor and Austin Cotterell Taylor.[19]

Recent examples

Some recent one-dollar salary earners worked in government as well, most notably former California governor Arnold Schwarzenegger,[20] former Massachusetts governor Mitt Romney,[21] and former New York City mayor Michael Bloomberg.

After promising to take only a dollar a year in November 2016, former U.S. President Donald Trump donated the first three months of his salary to the National Park Service and stated plans to donate all of his salary during the term.[22][23][24][25][26] Since then, President Trump donated his salary to various Federal Departments, fulfilling his campaign promise to do so.[27]

In 2015, then 15-year-old Corbin Duncan petitioned the Australian Prime Minister to take up a $1 salary.[28] The petition was unsuccessful but gained international media coverage.[29]

Instances of alternative compensation

While many executives who take a one-dollar salary also choose not to take any other forms of compensation, a number earn millions more in bonuses and/or other forms of compensation. For example, in 2010–11 Oracle's founder and CEO Larry Ellison made only $1 in salary, but earned over $77 million in other forms of compensation.[30]

In some cases, in lieu of a salary, the executives receive stock options.[31][32] In the United States, this approach impacts personal tax liability, because although stock and option grants are taxed at federal income rates, they may be exempt from some portion of payroll taxes (typically 7.65%) used to fund Social Security and Medicare.[33]

Executives argue that remuneration through stock instead of salary ties management performance to their financial benefits.[31] 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.[34]

Notable one-dollar salary earners

The following people have been employed for annual salaries of one dollar:


See also

References

  1. ↑ Isaac, Mike (February 10, 2012). "A Dollar for Your Thoughts: Silicon Valley's Famed Single-Digit Salaries". Wired. https://www.wired.com/business/2012/02/one-dollar-ceo-zuckerberg-page/. 
  2. ↑ "10 High-Powered Executives with $1 Salaries". 14clicks.com. http://14clicks.com/executives-1-dollar-salaries/. 
  3. ↑ "Vanderlip Leaves Biggest Bank and Will Aid McAdoo". The Owosso Argus-Press. September 25, 1917. https://news.google.com/newspapers?id=VmQiAAAAIBAJ&pg=2392,2535971&dq=salary-of-one-dollar&hl=en. 
  4. ↑ Crockett, Zachary (2019-12-08). "Why some of America’s top CEOs take a $1 salary" (in en-US). https://thehustle.co/1-ceo-salary/. 
  5. ↑ "31 U.S. Code § 1342 – Limitation on voluntary services". Legal Information Institute. https://www.law.cornell.edu/uscode/text/31/1342. 
  6. ↑ "How World War I Transformed Washington". Politico Magazine. https://www.politico.com/magazine/story/2014/08/washington-dc-world-war-one-109822. 
  7. ↑ "One Dollar a Year Men May Lose Two Months' Pay Because of Tax". March 14, 1919. https://cdnc.ucr.edu/cgi-bin/cdnc?a=d&d=SU19190314.2.9. 
  8. ↑ "Exit the Dollar-a-Year Man". The Independent (New York): p. 16. July 6, 1918. https://books.google.com/books?id=gYgeAQAAMAAJ&pg=RA1-PA16. 
  9. ↑ Josephson, Matthew (1952). Sidney Hillman: Statesman of American Labor. Doubleday. p. 364. https://archive.org/details/sidneyhillmansta001602mbp. Retrieved March 18, 2018. 
  10. ↑ "The Century-Long History of Tapping Wall Street to Run the Government" (in en). Smithsonian. https://www.smithsonianmag.com/history/century-long-history-tapping-wall-street-run-government-180962146/. 
  11. ↑ Cipriano Venzon, Anne, ed (1999). The United States in the First World War: An Encyclopedia. Routledge. pp. 203–204. https://books.google.com/books?id=YiZRC8bsOuoC&pg=PA203. Retrieved January 2, 2013. 
  12. ↑ "National Recovery Administration: Code of Fair Competition for the Petroleum Industry". http://ufdc.ufl.edu/AA00006879/00001. 
  13. ↑ National Archives Identifier: 7261744 HMS Entry Number: NC-79 28 Records Relating to the Blazer Committee Hearing, 1933 – 1936. Record Group 232: Records of the Petroleum Administrative Board, 1924 - 1936. https://research.archives.gov/description/7261744. 
  14. ↑ "'E Pluribus Unum!' 'One Out of Many' An Oil Company Grows Through Acquisitions, An Address at Lexington by member Paul G. Blazer, American Newcomen Society, copyright 1956 (page 6)". http://kykinfolk.com/kyboyd/general/Speech/1956Speech.pdf. 
  15. ↑ "Fuller Explains Refusal of Salary". The New York Times. September 20, 1926. https://www.nytimes.com/1926/09/20/archives/fuller-explains-refusal-of-salary-bay-state-governor-says-duty.html. 
  16. ↑ Pace, Eric (October 28, 1993). "Doris Duke, 80, Heiress Whose Great Wealth Couldn't Buy Happiness, Is Dead". The New York Times. https://www.nytimes.com/1993/10/29/obituaries/doris-duke-80-heiress-whose-great-wealth-couldn-t-buy-happiness-is-dead.html. 
  17. ↑ Bailey, Art. "Clarence Decatur Howe". Canada's Digital Collections. http://collections.ic.gc.ca/heirloom_series/volume5/218-221.htm. 
  18. ↑ James, Mel. "John Wilson McConnell". Canada's Digital Collections. http://collections.ic.gc.ca/heirloom_series/volume6/318-319.htm. 
  19. ↑ "The History of Metropolitan Vancouver - 1965 Chronology". http://vancouverhistory.ca/chronology1965.htm. 
  20. ↑ Tuttle, Mike (February 3, 2012). "Zuckerberg's One-Dollar Salary: Why Do CEOs Do That?". WebProNews. http://www.webpronews.com/zuckerbergs-one-dollar-salary-2012-02. 
  21. ↑ Ferguson, Kevin (January 6, 2012). "How does a dollar a year salary work?". The Madeleine Brand Show. 89.3 KPCC. http://www.scpr.org/programs/madeleine-brand/2012/01/06/22031/dollar-a-year/. 
  22. ↑ Chandler, Adam (November 16, 2016). "The Dollar-a-Year Man". The Atlantic. https://www.theatlantic.com/politics/archive/2016/11/trump-presidential-salary/507965/. 
  23. ↑ Fredericks, Bob (April 4, 2017). "Trump donating salary to National Park Service". New York Post. https://nypost.com/2017/04/03/trump-donating-salary-to-national-park-service/. 
  24. ↑ "How common is Trump's $1 salary?". BBC. November 14, 2016. https://www.bbc.co.uk/news/election-us-2016-37977433. 
  25. ↑ Nguyen, Tina (March 13, 2017). "Is Donald Trump Actually Donating His Presidential Salary?". Vanity Fair. http://www.vanityfair.com/news/2017/03/donald-trump-salary-donation. 
  26. ↑ "Trump-O-Meter: Take no salary". PolitiFact. http://www.politifact.com/truth-o-meter/promises/trumpometer/promise/1341/take-no-salary/. 
  27. ↑ "Trump-O-Meter:". PolitiFact. https://www.politifact.com/truth-o-meter/promises/trumpometer/promise/1341/take-no-salary/. 
  28. ↑ "Brisbane teenager calls on Malcolm Turnbull to take $1 salary" (in en-AU). ABC News. September 26, 2015. http://www.abc.net.au/news/2015-09-26/brisbane-teenager-calls-on-malcolm-turnbull-to-take-$1-salary/6806968. 
  29. ↑ Duncan, Corbin (October 2, 2015). "Why I want the Prime Minister to give up his $500,000 salary" (in en-US). The Sydney Morning Herald. http://www.smh.com.au/comment/why-i-want-the-prime-minister-to-give-up-his-500000-salary-20151001-gjz3dy.html. 
  30. ↑ Brush, Michael (January 17, 2012). "The myth of the $1 CEO – 1 – executive compensation –". MSN Money. MSN. http://money.msn.com/investing/the-myth-of-the-1-dollar-ceo-brush.aspx. 
  31. ↑ 31.0 31.1 31.2 31.3 31.4 31.5 Herbst, Moira (September 14, 2007). "The Elite Circle of $1 CEOs". Bloomberg L.P.. https://www.bloomberg.com/bw/stories/2007-09-14/the-elite-circle-of-1-ceosbusinessweek-business-news-stock-market-and-financial-advice. 
  32. ↑ Mayerowitz, Scott (December 3, 2008). "The Other Side of the $1 Salary". ABC News. https://abcnews.go.com/Business/Economy/story?id=6378775&page=1. 
  33. ↑ Margolis, Steven M.. "IRS Extends Indefinitely Stock Option FICA/FUTA Tax Withholding Moratorium". Weil, Gotshal & Manges LLP. http://www.weil.com/news/pubdetail.aspx?pub=8044. 
  34. ↑ Reich, Robert (January 9, 2001). The Future of Success. p. 74. ISBN 0375411127. https://archive.org/details/futureofsuccess00reic/page/74. 
  35. ↑ "How common is Trump's $1 salary?". November 14, 2016. https://www.bbc.co.uk/news/election-us-2016-37977433. 
  36. ↑ "TELUS Annual Report 2011 – CEO letter to investors". About.telus.com. December 31, 1999. http://about.telus.com/investors/annualreport2011/our_message_and_team/ceos_letter/a_passion_for_growth/. 
  37. ↑ 37.0 37.1 37.2 37.3 37.4 37.5 Gillet, Rachel (August 14, 2015). "13 top executives who make a $1 salary or less". Business Insider Inc.. http://www.businessinsider.com/ceos-who-take-1-dollar-salary-or-less-2015-8. 
  38. ↑ Durisin, Megan (August 10, 2013). "Musk Gets $4.3 Million of Stock Options for Model X Work". Bloomberg. https://www.bloomberg.com/news/2013-08-09/musk-gets-4-3-million-of-stock-options-for-model-x-work.html. 
  39. ↑ 39.0 39.1 39.2 "Google SEC Filing 2006". Sec.gov. https://www.sec.gov/Archives/edgar/data/1288776/000119312506010016/d8k.htm. 
  40. ↑ 40.0 40.1 Wells, Nick (March 1, 2017). "The real story behind Snap CEO Evan Spiegel's $1-a-year salary". https://www.cnbc.com/2017/03/01/the-real-story-behind-snap-ceo-evan-spiegels-1-dollar-a-year-salary.html. 
  41. ↑ Fox, Emily Jane. "15 top executives with $1 salaries". CNNMoney. https://money.cnn.com/gallery/news/2014/09/15/executives-one-dollar-salaries/13.html. 
  42. ↑ "Compensation for Henry Samueli, BROADCOM, Chairman of the Board of Directors (effective May 21, 2003)". http://66.218.69.11/search/cache?ei=UTF-8&p=henry+samueli+salary&fr=yfp-t-501&u=swz.salary.com/execcomp/layouthtmls/excl_execreport_103441.html&w=henry+samueli+salary&d=eC_Px-ljO9R-&icp=1&.intl=us. [yes|permanent dead link|dead link}}]
  43. ↑ 43.0 43.1 "How common is Trump's $1 salary?". BBC News. November 14, 2016. https://www.bbc.co.uk/news/election-us-2016-37977433. 
  44. ↑ "WhatsApp founders Jan Koum and Brian Acton own nearly $9 billion in Facebook stock". The Economic Times. http://economictimes.indiatimes.com/news/international/business/whatsapp-founders-jan-koum-and-brian-acton-own-nearly-9-billion-in-facebook-stock/articleshow/44978290.cms. 
  45. ↑ "10-Q Watch: Yahoo's Acquisitions; Yang Salary". paidContent.org. August 9, 2007. http://www.paidcontent.org/entry/419-10-q-watch-yahoos-acquisitions-yang-salary/. 
  46. ↑ Chen, David W. (October 4, 2006). "The Goldman Sachs Crew That's Helping Run Trenton Government". p. 2. https://www.nytimes.com/2006/10/04/nyregion/04goldman.html. 
  47. ↑ "The Dollar-a-Year Man". Forbes. May 8, 2002. https://www.forbes.com/2002/05/08/0508iacocca.html#78e93a271c34. 
  48. ↑ Grubb, Jeffrey (April 5, 2013). "Zynga CEO volunteers to reduce his salary to $1". VentureBeat. https://venturebeat.com/2013/04/05/zynga-ceo-volunteers-to-reduce-his-salary-to-1/. 
  49. ↑ "Facebook founder Mark Zuckerberg's base salary falls to $1". The Guardian. April 2, 2014. https://www.theguardian.com/technology/2014/apr/01/facebook-founder-mark-zuckerberg-base-salary-one-dollar. 
  50. ↑ "HP CEO Meg Whitman's salary: $1". CNN Money. https://money.cnn.com/2011/09/30/technology/meg_whitman_salary/index.htm?source=cnn_bin. 
  51. ↑ "How does a dollar a year salary work?". KPCC. January 6, 2012. http://www.scpr.org/programs/madeleine-brand/2012/01/06/22031/dollar-a-year/. 
  52. ↑ "The 3.55 Billion Dollar Man". http://americasmarkets.usatoday.com/2015/03/24/the-3-55-billion-man/. 
  53. ↑ "Marvell Tech's CEO, Acting COO Take Salary Cut, Each To Be Paid $1". MarketWatch. January 16, 2008. http://www.marketwatch.com/news/story/marvell-techs-ceo-acting-coo/story.aspx?guid={3C6E2756-3E5B-4566-8AC4-F6F5929D42C6}. 
  54. ↑ "Apple's 2012 Proxy". http://files.shareholder.com/downloads/AAPL/1661508868x0x531628/b6ec469d-aff8-4eef-9077-1defc2258f6b/2012_Proxy.pdf. 
  55. ↑ "Apple's 2009 Proxy". Investor.apple.com. January 7, 2009. http://investor.apple.com/secfiling.cfm?filingID=1193125-09-2537&CIK=320193. 
  56. ↑ "Apple's 2007 Proxy". Investor.apple.com. April 16, 2007. http://investor.apple.com/secfiling.cfm?filingID=1104659-07-28382&CIK=320193. 
  57. ↑ Dash, Eric (September 24, 2010). "Citigroup's Pandit Takes $1 in Compensation for 2010". The New York Times. ISSN 0362-4331. https://www.nytimes.com/2010/09/25/business/25citi.html. 
  58. ↑ Baime, Albert (2014). The Arsenal of Democracy. New York: Houghton Mifflin Harcourt. pp. 72–73. ISBN 978-0-547-71928-3. 

Further reading

  • Kimes, Mina (June 1, 2011). "A $1 CEO isn't a bargain". http://fortune.com/2011/06/01/a-1-ceo-isnt-a-bargain/. 
  • Hamm, Sophia; Jung, Michael J.; Wang, Clare (Fall 2015). "Making Sense of One Dollar CEO Salaries". Contemporary Accounting Research 32 (3): 941–972. http://ssrn.com/abstract=2549340. 
  • Reagan, Michael D. (1959). Serving two masters: Problems in the employment of dollar-a-year and without compensation personnel (PhD dissertation). Princeton University.
  • Cuff, Robert D. (1967). "A 'Dollar-a-Year Man' in Government: George N. Peek and the War Industries Board". The Business History Review 41 (4): 404–420. doi:10.2307/3112648. 
  • Stewart, Jeremy (2013). Captains of Industry Crewing the Ship of State: Dollar-a-Year Men and Industrial Mobilization in WWII Canada, 1939-1942 (PDF) (Thesis). University of Calgary.



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