The $1 Dozen: These CEOs Practically Work for Free

As fellow Fool Alyce Lomax has opined on countless occasions, CEO pay in this country is out of control. For the most part there tends to be a major disconnect between a company's performance and a CEO's pay, leading many investors to call for "pay-for-performance" packages for many of our nation's largest companies.

Whether you believe it or not, some of these CEOs are actually listening to their shareholders and have proactively reduced their base salaries to next to nothing -- and I mean that literally!

Here are 12 CEOs who in 2011 received either $1 as their base salary or, in some cases, absolutely nothing at all:




Meg Whitman

Hewlett-Packard (NYS: HPQ)


Vikram Pandit

Citigroup (NYS: C)


John Mackey

Whole Foods Market (NAS: WFM)


Larry Page



Larry Ellison



Richard Kinder

Kinder Morgan (NYS: KMI)


Mark Zuckerberg*



Rob McEwen

US Gold/Minera Andes


Matthew Lambiase

Chimera Investment


Malon Wilkus

American Capital Agency


Richard Fairbank

Capital One Financial


Strauss Zelnick

Take-Two Interactive


Source: Forbes; Huffington Post. Based on 2011 salary (does not include bonuses, options, or other forms of compensation). *Zuckerberg's salary will drop from $500,000 to $1 in 2013.

Don't get me wrong -- these CEOs don't work for free. Many of them are eligible for bonuses, stock options, or a combination of the two, while others have a very large stock holding within their company. Wilkus receives a base salary of almost $1.5 million for his work at parent company American Capital. In the end, though, this meets the common goal of shareholders in that a CEO vested in his company's stock is much more likely to work toward growing the business -- and, subsequently, shareholder equity -- than one receiving a large payday regardless of the performance of the business.

Small pay = big success? Not so fast...
A $1 salary doesn't guarantee success, however. Sometimes a $1 salary is initiated in order to save cash. This is exactly what former Research In Motion (NAS: RIMM) co-CEOs Jim Balsillie and Mike Lazaridis did. If you ask any of the BlackBerry-maker's current shareholders, they'll probably tell you the duo was still overpaid, since the company continues to lose smartphone market share hand-over-fist.

Similarly, Citigroup's Vikram Pandit and recently hired Hewlett-Packard CEO Meg Whitman decided it was in their best interest to receive a base salary of $1 in order to cut costs. These two CEOs represent a class of leaders that reactively reduced their salaries. In Citigroup's case, the need to raise huge amounts of capital necessitated cutting costs and restoring a public image tarnished by the foreclosure fallout. For HP, its failed Leo Apotheker experiment and its inability to gain market share in any of its major business segments required cost-cutting measures.

Strength in numbers -- very tiny numbers
Then again, a $1 or no-salary base has proven quite effective for investors, based on the history of most of the aforementioned companies.

Richard Kinder, CEO and founder of Kinder Morgan, owned about 216 million class 'A' shares of his company as of Jan. 31., or about 40% of the outstanding shares in that class. If there's any CEO out there who has a vested interest in the performance of his or her business, it's Richard Kinder. Not only did Mr. Kinder not sell any of his shares since the company went public in 2006, but he also implemented a solid dividend payout of $1.24 per year. This 3.4% yield is padding his pockets and taking shareholders along for the ride. It also doesn't hurt that Kinder Morgan's stock is over 22% over the trailing 52-weeks.

The people's champion
Whole Foods CEO John Mackey has been a shareholders' champion as well, taking only a $1 salary since 2006. That year, in a letter to shareholders, Mackey wrote, "I have reached a place in my life where I no longer want to work for money, but simply for the joy of the work itself and to better answer the call to service that I feel so clearly in my own heart."

It's no surprise that earlier this year Fortune labeled Whole Foods as the 32nd best company to work for. Executives are still capped at 19 times the average full-time salary. Mr. Mackey's passion for his business has clearly been passed on not only to his employees, but also his stock price, which is nearing an all-time high.

Perhaps no CEO's minute salary is more chronicled than that of former Apple CEO Steve Jobs. Having received a $1 salary for more than a decade, Jobs transformed his computer company into the largest company in the world. Now that's effective leadership!

Foolish roundup
A tiny salary doesn't necessarily make for a great CEO, but those who are willing to back up their pay with stock holdings and performance incentives are historically going to have shareholders on their side more often than not. I'm not such a radical that I feel a CEO should be thrown out the window altogether, but most of these dozen are setting an example that the rest of the market would be wise to pay attention to.

Disagree with me? Let me and your fellow Fools know about it in the comments section below. Also, consider tracking these companies with your free and personalized watchlist.

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At the time thisarticle was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Citigroup, Whole Foods, Google, Oracle, Chimera Investment, Take-Two Interactive, and Apple. Motley Fool newsletter services have recommended buying shares of Whole Foods, Google, Take-Two Interactive, and Apple, as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that is always the right price: free!

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