Rob Walker | @YahooTech
The recent news about Apple’s rejiggering of CEO Tim Cook’s pay package — described by AllThingsD’s Peter Kafka, here — deserves at least one cheer. That’s because the new scheme doesn’t involve the most irritating trend in tech chief-executive compensation gestures: The $1 salary.
Mark Zuckerberg is the most recent technology honcho to join “the $1 salary club,” as Quartz dubbed it, listing Steve Jobs, Larry Page, Sergey Brin, Elon Musk, Larry Ellison, Meg Whitman and Jerry Yang among those who at one time or another deigned to accept a mere buck as their official annual salary. As the Quartz piece noted, this is a symbolic gesture — supposedly signaling some combination of pure devotion to corporate greatness, humble servility to shareholders, and if not outright financial sacrifice then at least a fearless embrace of personal financial risk.
But as has been pointed out repeatedly, this gesture is basically phony. Specifics vary, but such executives invariably have deals that pay out richly in other ways (stock options, bonuses), are already insanely rich, or both. Meanwhile they enjoy all the other perks of top-executive life, from private planes on down. What the $1 gambit really symbolizes is its own total irrelevance.
If, say, Mark Zuckerberg wanted to signal to shareholders and the wider world that it’s not about the money, and that he is willing to make tangible sacrifices until he has proven that Facebook is a brilliant and profitable business that richly rewards its shareholders, he (and other “$1 club” members) could consider alternative strategies. Allow us to propose a few options for the tech CEO who really wants to embrace personal financial austerity until the company succeeds. Using Facebook as a hypothetical (sorry, Mark!), Zuckerberg could:
● Pledge that upon exercising his next 60-million-share tranche of stock options, he’ll donate the difference between his strike price (six cents) and the IPO price to charity. That would really align his interests with those of public shareholders.
● Vow to fly coach, drive a '93 Corolla and use public transportation whenever possible, until FB shares trade at double their IPO price. Sounds pretty motivating, right?
● Agree to actually live off the median salary of his or her company until specific goals are met, rather than wave around the $1 figure while millions more stashed away in various bank accounts sustain daily life. If you're going to humble yourself by making what the secretary makes, how about also surviving on that sum?
● Eat all business meals at Applebee’s. All of them. This is a humility maneuver that would save shareholders money and inspire the typical top exec to work extra hard (because who wants to eat every meal at Applebee's?). In the event of a catastrophic drop in stock performance, venue will be demoted to Denny's and/or the International House of Pancakes, regardless of the time of day or the CEO's appetite for Moons Over My Hammy.
● No more galas, no red carpets or fancy premieres. In fact: a flip phone, a library card, and basic cable only until business improves.
● For a strategy that emphasizes downside risk, try this: The CEO can be paid normally (and exorbitantly) while trying to turn things around — but in the event of a failure, he or she must work as an Arby’s cashier, full-time, for the subsequent five years. Put some skin in the game!
● Maybe these schemes overthink the issue. A dissatisfied board could remove all financial consideration from the equation and require its CEO to wear a dunce cap until company shares best the S&P 500. The CEO may also be required to sit in the corner at subsequent board meetings, thinking about what he or she has done.
Okay, maybe I’m getting carried away. But we need to do away with the $1 gambit once and for all — it’s a cheap gimmick, and it's vaguely insulting. Maybe you have a better idea. What alternative “signals” would you suggest for CEOs who want to send a message by way of commitments that expire when business improves?