From Mark Zuckerberg To Elon Musk: Why Do The 'Rich CEOs' Take A $1 Salary?

The CEO, or Chief Executive Officer, holds the top position in any organization. Achieving this role is a significant accomplishment, requiring great responsibility and diligence due to the crucial role they play in guiding the entire company.

The main responsibilities of a CEO include growing the business, managing finances, and overseeing important decision-making processes crucial for the company¡¯s success. Every major decision must be approved by the CEO before being put into action. Furthermore, effective communication with employees, along with patience, promotes a smooth workflow within the organization.

Some people may think that being a company CEO means earning a large salary. However, a notable trend is emerging in the modern business world, with some CEOs firmly following it. It may seem surprising, but some CEOs choose to take a salary of just $1.

Several well-known CEOs have embraced this trend. Former Twitter CEO Jack Dorsey, Meta CEO Mark Zuckerberg, Tesla CEO Elon Musk, Google co-founders Larry Page and Sergey Brin, Apple co-founder Steve Jobs and Oracle co-founder Larry Ellison have been some of the richest people who are or were a part of the ¡®$1 salary¡¯ club. Yes, you read that right, a $1 salary.

jack dorsey/getty

But why did they choose to do this? And how did they end up on the ¡®richest people¡¯ list with such a minimal salary?

Well, the main and quite obvious reason is taxes.

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What Does a $1 Salary Mean?

Many co-founders and CEOs opt for a lower, or even a minimal salary, such as $1, to avoid paying high-income tax that would otherwise apply if they were to take millions of dollars as salary.

The $1 salary is not the sole income that these wealthy CEOs and Co-founders derive from their companies.

It is just one component of the overall remuneration package they are likely to receive. Therefore, with this minimal salary, they typically acquire stock/equity in the company and performance-based bonuses as compensation, as the tax on capital gains is usually lower than the income tax levied on high salary income.

This arrangement benefits both the CEO/Co-Founder and the company. When compensation is in the form of stock/equity and bonuses, earnings become linked to the company's performance.

Idea of a $1 salary

The idea of a one-dollar salary emerges when top chief executives around the world opt to receive only $1 as compensation from their companies. Even though they work without direct financial rewards, these CEOs comply with legal requirements that mandate a minimum salary. By accepting this symbolic amount, they are essentially regarded as volunteers within the organization.

History of $1 Salary

The tradition of the $1 salary has its roots in the early 1900s, a time marked by global conflict. During World War II, some prominent business leaders volunteered their services to the government without expecting compensation. However, legal restrictions prevented the President from accepting free services from businessmen. Hence, the concept of a one-dollar salary emerged as a workaround.

In 1978, Lee Iacocca, the CEO of Chrysler Corporation, adopted this strategy to rejuvenate his company in the aftermath of the oil crisis. He sought government assistance to aid in this effort.

In the 21st century, many wealthy CEOs continue to follow this practice. However, their motivations have shifted. It's no longer solely about offering free services; instead, it's about strategically maximizing their earnings.

How CEOs Manage with Just a $1 Salary?

A CEO's income isn't restricted to just a one-dollar salary; they also receive compensation from the company in the form of stocks or equity. This type of compensation is beneficial as it is taxed at a much lower rate compared to regular income.

As the company's performance improves, the value of the shares increases, resulting in a rise in the CEO's various forms of income. These stocks and bonus packages, along with the one-dollar salary, often compensate the CEO quite generously for their apparent 'sacrifice' and, in some instances, even exceed their income.

Some of the most prominent CEOs who are members of this club and staunchly adhere to the $1 salary trend include:

• Larry Page, Co-founder of Google
• Sergey Brin, Co-founder of Google
• Mark Zuckerberg, Co-founder and CEO of Meta
• Elon Musk, CEO of SpaceX and Tesla
• Steve Jobs, Co-founder of Apple
• Meg Whitman, former CEO of HP
• Jeremy Stoppelman, CEO of Yelp
• Jack Dorsey, former CEO of Twitter and Square

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