Beleaguered by the economic crisis - and to dodge public scrutiny - some of the nation's top CEOs pledged to forgo their million-dollar salaries for a mere $1 until their companies returned to profitability. From Citigroup to General Motors to Whole Foods, a handful of the CEOs repudiated the notion of accepting lucrative salaries while at the helm of an underperforming company. Here's who they are and how much these business czars are making in the aftermath. (Find out how to determine whether a CEO is being overpaid. See Evaluating Executive Compensation.)
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Vikram Pandit, CEO of Citigroup
In 2009, the chief of Citigroup, Vikram Pandit, agreed to a salary of $1 until the one-time world's largest bank rebounded under his direction. Citigroup received a government bailout of $45 billion amid the economic downturn, which the company repaid in full in 2010. In fact, the government's sale of Citigroup shares in December yielded $12 billion for the American taxpayer. Following this positive news, in January of this year, Pandit's salary was raised from $1 to $1.75 million, according to a U.S. Securities and Exchange Commission filing.
Rick Wagoner, Former CEO of General Motors
Under pressure from Washington lawmakers, the former CEO of GM, Rick Wagoner, took a $1 salary as the government bailed out the auto industry. About four months later, on March 30, 2009, the Obama administration rejected Wagoner's plans to restructure the company and government officials forced out GM's titan. From 2005 until 2009, it is reported GM accumulated more than $80 billion in losses under Wagoner's management. Nevertheless, his retirement package is valued at more than $10 million. According to the U.S. Securities and Exchange Commission, this includes $1.64 million in annual benefits for each of the next five years and $74,030 for each year of the rest of his life. (Learn about this hidden perk and why it's often bad news for investors. Read A Close-Up On Gross Ups.)
John Mackey, CEO of Whole Foods
When the grocery entrepreneur John Mackey warned that food sales would slow amid the recession in 2007, he also announced that he would be reducing his salary to $1. Since then, he's advocated against sky-high executive pay and has stayed true to his own convictions. Not only does he not take a salary, he's also passing up a bonus and stock options. The after-tax remainder of proceeds on future stock options was $379,636 in 2009 and Mackey donated that money to an animal charity.
Edward Liddy, Former CEO of American International Group, Inc.
After insurance giant AIG secured $85 billion in government loans and rumors emerged about the excessive perks for the company's head honchos, Edward Liddy - who was tapped by the former U.S. Treasury Secretary Henry Paulson - was brought in to do some damage control. Along with slashing corporate bonuses for AIG's top executives, Liddy took a salary of $1 for 2008 and 2009.
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But Liddy was later under fire by government officials for paying out $165 million in executive bonuses - by this time, the American taxpayer had invested $182 billion in the company. In the wake of this uproar, Liddy stepped down. Liddy also has extensive experience serving on the Board of Directors of major blue chip companies such as Abbott Laboratories, Boeing and 3M.
Jen-Hsun Huang, CEO of NVIDIA
Fueled by a tough business year, in 2009, Jen-Hsun Huang, the CEO of the graphic processor company, Nvidia, moved to reduce to his salary to $1. But Huang, who ranks No. 10 on the Forbes list of top CEO compensation, still pulled in $31.4 million in stock gains. He also reportedly owns 4.4% of Nvidia shares, which are worth about $300 million.
The Bottom Line
Taking a $1 salary for most CEOs is a symbolic gesture to their shareholders and the public that they are committed to the job - not just to the dollar figures. Despite dropping their salary to nearly nothing, CEOs also have the advantage of profiting from stock options and other types of compensation. In 2008, the heads of 32 companies in the Russell 3000 took $1, but many still earned millions of dollars, according to data from the research firm, The Corporate Library. (These Canadian company leaders are bringing home the bacon. See Top Earning Canadian CEOs.)
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