For CEOs, $1 pay can still mean millions

At a time of growing public outcry against rising executive pay, many CEOs are voluntarily taking pay cuts that reduce their salaries or bonuses to $1 a year or less.
This is a great public relations exercise, but it's really an empty gesture, according to a new study. They can still rake in enormous amounts of wealth. 
Here's the big picture:

Forty-one CEOs who earned a dollar or less in salary or bonus last year actually made more than $173 million through other pay channels like stock grants and perks, according to a new study by the Corporate Library. While the public relations impression is that these CEOs are working for a dollar a year, in most cases this simply is not the case, writes Greg Ruel, the author of the study.
In that group of 41, 18 CEOs voluntarily took a cut in salary or cash bonus down to $1 or less. But the voluntary pay cut was no great personal sacrifice. The reason: They already owned almost $6 billion in their company stock, says the study. (For the others in this group of 41, the reasons they earned no salary is not given, or it's just typical of how pay packages work in their sectors.)
The trick here is that salary and cash bonus, the kind of pay being zeroed out in these PR exercises, typically make up only a tiny portion of overall pay.
Last year, CEOs at big companies made $10 million on average. That pay regularly includes large dollops of stock options which then get converted into tens of millions of dollars. In contrast, zeroing out salary typically costs a CEO $1 million or less. The voluntary forfeiture of salary and cash bonus is largely symbolic, concludes Ruel.

Take Steve Jobs at Apple (AAPL) , for example.
He has famously taken a $1 annual salary since 1997. But he gets huge stock option grants, which he then converts into shares. Lots of them. So as of the end of last year, he had almost a half-billion dollars worth of Apple stock. Plus he owns his own jet, a Gulfstream V given to him by Apple.
Other members of the super-rich CEO set who had a salary or bonus of $1 or less last year include Eric Schmidt of Google (GOOG) , Jerry Yang of Yahoo (YHOO) and Liang Zhang of Synutra International (SYUT) , a Maryland-based company that produces milk products in China. As of the end of last year, Schmidt owned $2.9 billion in company stock, Yang had $644 million in stock, and Zhang owned $397 million in company stock.

These three are among about a dozen of the dollar CEOs who actually have huge wealth in the form of company stock, and will benefit massively on a personal level if the company's fortunes improve, says Ruel. They are not just working for free as their salary and bonus levels may appear to say.
For my latest column on executive pay issues, read " CEOs earn big bonuses for bad year ."

Source: http://blogs.moneycentral.msn.com

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