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Comment by craigbellot | Hacker News Reader

I never understood why management sometimes take $1 salary. Doesn't the IRS see that as non reasonable compensation?

All of your compensation is in stock and worth the stock price.

1) It looks good to investors: you've got to believe in it if your worth is in the stock, for instance most of Bill Gates net worth is in Microsoft stock and it would look bad if he sold it all,

2) You pay lower taxes: capital gains vs income, not to mention

3) it sounds good in the press and when people say it

I had it explained to me that they have to take a salary to be eligible to receive company perks, such as a company car, travel expenses, etc. Therefore they take a nominal salary of $1 so that they are officially on the payroll and are receiving a salary, and hence can receive all the other perks and benefits through the company.

CEOs are still paying taxes on their non-salary compensation.

So what exactly is the purpose or benefit?

Probably to receive stock options in compensation. Sergey Brin, Larry Page and Eric Schmidt have also done the same. They seem to be exempt from payroll taxes in the United Sates.

[1]: http://www.sec.gov/Archives/edgar/data/1288776/0001193125060...

Sometimes the explanation is more optimistic than that--sometimes the CEO is rich enough it makes little difference. E.g. John Mackey (Whole Foods CEO) switched to a $1 salary because he felt he no longer needed to work for money [1].

I mean, think about it: Mark owns over $10 billion in Facebook stock--he makes over a billion dollars by pushing the stock price up 10% (or loses over a billion if the stock drops 10%). Either way, a $15 million salary would be fairly insignificant...

[1] http://www.businessweek.com/bwdaily/dnflash/content/may2007/...

it also aligns the CEO's best interests with the best interests of the shareholders since both are being compensated the same way.

Less tax impact.

http://en.wikipedia.org/wiki/One-dollar_salary

Maybe to pay homage to Steve Jobs? Otherwise, I dunno.

PR.

People complain when they take too big of a salary and complain when they take $1...

Can't make people happy.

Well, they're still taking a large salary, it's just in different currency. If you pay someone 1m dollars, 750k euros, or $1m worth of stock, it's still essentially salary...

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