First, I owe some apologies to the Investor Uprising community for taking so long to get back in touch. Thankfully, business is doing really well. In fact, business is so strong, that I proudly announce that I, Michael Shmarak, Principal of Sidney Maxwell Public Relations, am reducing my take-home salary to one dollar.
That's right, folks, you read it here first. I've asked my Board to reduce my salary to twenty nickels, equally divided among each pay period for the remainder of SMPR's fiscal year, so that more money can be distributed to my employees and other stakeholders. Yes, my friends, life is good.
Reality check time, people: I have three kids to feed; I have a home; my company is not public. The only "Board" I report to is my wife (although I do share the financial success of the business with my team). If you didn't buy the pomp and circumstance that I was reducing my salary to a measly buck, then why should we believe any announcements from the vast number of CEOs who are making a big deal about the same thing?
For as much talk about transparency and accountability that we see and hear in this day and age, I just don't get why chief executives try to pull the wool over our eyes about the correlation about their salaries and the confidence of the business.
I was reading a white paper I found online from my alma mater about the consequences of CEOs taking dollar salaries. In it, the research team suggests that (among other conclusions) that a $1 salary suggests that the company has either had poor financial performance or might be going through some sort of crisis, and the CEO in question needs to save face. Look at NFL commissioner Roger Goodell, who made a big deal about his reduction in salary during the NFL lockout. Did Roger take any other steps to reduce the $10 million in bonuses and other compensation he earned last year? Did he give any money back to NFL Charities? Did he share his wealth with others on the NFL staff? Way to take one for the team, Commish.
If CEOs were really interested in the well-being of their companies and the performance of their people -- as they often tout in corporate reports -- why aren't they cashing in their options and bonuses, and placing those funds in a pool so people who need the money can access to it? You know, like the people who are struggling to make ends meet and live from paycheck to paycheck?
To me, this is more than a corporate communications play, based all around greed. CEOs don't make decisions by themselves. They take all the credit when things go right and blame everyone else when things go wrong. Then there are the few CEOs who fall on a proverbial sword, serving as martyrs to Wall Street and others who want to believe them. I recall the beginning of this year when Citibank (NYSE: C) announced CEO Vikram Pandit had his $1.75 million salary restored because the bank had become profitable again.
Pandit had said that his salary should be a buck with no bonus (GASP!) until the bank showed it was in the black. How nice of him to make such a gesture... considering he only made $10 million before making the announcement. In 2008, Pandit also received $79,706,630 from Citigroupís purchase of Old Lane Partners, a hedge fund he co-founded. And he had to tap dance around the little issue that his company had purchased a private plane for his use... after receiving public bailout money.
Yes, Apple Inc. (Nasdaq: AAPL) CEO Steve Jobs famously takes home a salary of only $1 a year. But he's more than adequately compensated in shares and reimbursements. Though he still doesn't receive equity, he received $248,000 this past year for the use of his private plane for business purposes and owns 5.5 million of the company's stock.
Eric Schmidt only received $1 a year as CEO of Google (Nasdaq: GOOG). But after he stepped down to become the companyís executive chairman earlier this year, he got a pay raise... to $1.25 million, with the possibility of a target bonus of 400% his base salary. Oh, yeah: According to Forbes, Schmidt has a net worth of $6.3 billion.
The point is that $1 salaries are rarely what they seem (or what the company wants the public to believe). Take Jeffrey Katzenberg, CEO of Dreamworks Animation Inc. (Nasdaq: DWA). He only received a $1 salary this past year. But he also received $6,727,127 in stock and options.
Am I wrong here? Do you believe that CEOs are in the right about declaring $1 salaries while failing to mention their other forms of compensation? If this is OK, then we can all learn a few things about how to stretch a dollar as far as the truth.