“It sounds noble. A top executive takes a $1 salary, opting to base his pay on the performance of the company’s stock, and thus the company itself,” Michael Brush writes for MSN Money. “At a time when the average CEO makes about $10 million a year, the $1 salary makes for good public relations. But dig into the pay packages and you’ll find a different story. As a rule, CEOs on the dollar menu have some of the richest pay packages around.”
“Steve Jobs has a golden touch, having founded Apple and having played a big role in the development of Pixar. But he collects just $1 a year as Apple chairman and CEO and gets nothing for doing both jobs at Pixar. Even so, he’s well-compensated for his time,” Brush writes. “In 2003, Jobs convinced Apple to exchange the options he held on 15 million Apple shares for 10 million restricted shares of Apple stock. Both numbers are adjusted for stock splits. Options only pay off if a stock rises beyond a pre-set target price, and Jobs options were below their ‘strike’ price. In essence, he received a smaller number of real shares in exchange for a larger batch of potential shares. Restricted shares are not registered with the Securities and Exchange Commission, and, typically, there are restrictions on when the shares may be sold. As it turns out, though, he would have made more money holding onto the options because of how well Apple’s shares have performed.”
“When the swap was made, the company said Jobs wanted to eliminate the ‘overhang’ of unexercised options that might depress Apple’s stock price. Apple said the move also freed up options that could be used to compensate other employees. It wasn’t the first creative pay maneuver at Apple for Jobs, who returned to the company in 1997. In 1999, Apple gave Jobs his own Gulfstream jet plus compensation for related expenses like taxes. Total value of the package: $90 million,” Brush writes. “Jobs has done even better at Pixar despite the lack of any formal pay there, too. In lieu of pay, Jobs owns 60 million shares, or 50.6% of the company. He originally paid $10 million for that stake and later injected $50 million of his own money into the company, according to BusinessWeek. With Walt Disney’s deal to buy Pixar, that slug of stock was worth more than $3.4 billion.”
Full article here.
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