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By Valerie S. Johnson
It happened at Apple, Google, Yahoo, Cisco, and other big companies. The top brass reduced their annual salaries to $1. But don’t worry about the chief executives ending up on welfare. Google’s CEO and its two co-founders each own company stock currently valued in the billions. Yahoo’s CEO has the right to receive a generous bonus of stock options. These two companies had drastically different financial results last year. Why would they employ similarly radical compensation strategies?
Answer: it sends a certain message to shareholders and employees. If the company had a good year, the boss looks like an altruistic hero by sharing the wealth and saving money that would have spent on his compensation and the associated taxes.
If, on the other hand, the stock price has plummeted, the CEO’s voluntary pay cut may help bridge the corporate gap between the haves and the front line have-nots. Sharing the personal economic pain during less profitable times may give the chief more credibility.
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It happened at Apple, Google, Yahoo, Cisco, and other big companies. The top brass reduced their annual salaries to $1. But don’t worry about the chief executives ending up on welfare. Google’s CEO and its two co-founders each own company stock currently valued in the billions. Yahoo’s CEO has the right to receive a generous bonus of stock options. These two companies had drastically different financial results last year. Why would they employ similarly radical compensation strategies?
Answer: it sends a certain message to shareholders and employees. If the company had a good year, the boss looks like an altruistic hero by sharing the wealth and saving money that would have spent on his compensation and the associated taxes.
If, on the other hand, the stock price has plummeted, the CEO’s voluntary pay cut may help bridge the corporate gap between the haves and the front line have-nots. Sharing the personal economic pain during less profitable times may give the chief more credibility.
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