One dollar salary Zuckerberg: Why CEOs Do That?

In Facebook IPO filing this week, lots of little tidbits of information about a company comes to light. Josh Wolford reported facts, such as 2013, Facebook founder Mark Zuckerberg’s salary was set at $ 1 per year.

Zuckerberg certainly not exec just to do this. In the wake of the Wall Street financial crisis, the CEO’s salary is under public scrutiny, especially customers lost money. Thus, some companies make hay fact that their CEO took the modest salary.

However, CEO $ 1 another race. Zuckerberg Why do this? Without the money lost due to maneuvering Facebook or unregulated market activities. Facebook is general agreement on the generally high. Zuckerberg Public opinion is good, especially after the movie “The Social Network”. Zuckerberg capitalist heroes, magic geek, all models of America love of both left and right. Who would blame him for taking the company public, raking in billions off of something that users have to pay?

How else $ 1 executives? Along with others who are listed as having a single-digit salary Apple’s Steve Jobs, Lee Iacocca of Chrysler, New York Mayor Michael Bloomberg, former Governor of California Arnold Schwarzenegger, Meg Whitman HP, and many Google with the three members of Sergey Brin, Larry Page and Eric Schmidt.

Public perception salary, and intended for, sacrificed for the sake of executives who oversaw the company or municipality. And, this is not to say that the altruistic intention was not involved, particularly in the case of executives at the helm of a company that they started.

In the case of elected officials like Schwarzenegger and Bloomberg, low wages reflects a commitment to turn around a bad situation that they choose to repair. Endears them to voters and constituents. Award in the excellent public goodwill.

The action man hearkens back to a time when America was scratching a bad way. Around World War I, business executives who had come to meet the branch of the U.S. government that they do business expertise. Executives who just need a dollar salaries and called The Men dollar.

Lee Iacocca was brought in to turn around Chrysler Corporation went bankrupt in 1978. The Iacocca run by Ford Motor Company after watching the failure of the public that the Ford Pinto. His reputation in the rock due to its “safety does not sell” a statement about the dangers of fire doors. However, Chrysler acknowledged that Iacocca, under all the public hype, is still a big glorious.

Iacocca took the $ 1 annual salary from Chrysler, which attracted the attention of his efforts as a rescue company, a major component of the American auto industry. It also helps to rehabilitate the public image Iacocca.

Public image taking advantage of low wages is easy to see, if the situation in the case of insolvent companies or heads of government are working to turn around the country.

However, there are real financial benefits exec requires a very low salary for running a successful company? There certainly can.

lower taxes. It’s simple. The payroll tax is higher than the tax on capital gains in the United States. This fact has led to a political argument over the last few years, and it has become common knowledge as a result.

Mark Zuckerberg direct current salary is $ 600,000 per year. In the case of the payroll tax, it has a 35% tax bracket. If, however, he reduced his salary to $ 1 and take stock options instead – a good deal for a company with an IPO as Facebook – handles it gets capital tax, which is currently at 15%. Zuckerberg currently holds 28.2% of the company.

It is in vain, but let’s get a little crazy with the possibilities here.

2) No Tax. Think this one, as suggested in a CNBC story. If Zuckerberg is to release and future stock bonus or extra gift, did not withdraw any shares (so a capital gain), he effectively had revenue of $ 1 per year, all while building a fortune as a stock rises, hating, etc. he was making enough money to live comfortably, though not extravagantly, for the time being. There is no tax burden at all, continue to hijack your resources back to themselves, to build a legacy far greater.

3) Living In Debt. Even after Zuckerberg savings exhausted, he could live off Home Equity Line of Credit. CNBC explains the situation:

People sometimes talk about the “flower of life” rich their wealth. But not really a tax efficient way to live if you are really, really rich. It is better to live in muni bonds and debts.

Zuckerberg is the best thing for a home equity line of credit, maybe a few lines of home equity. He had to borrow against the value of real estate owned. The money he received from the HELOC debt from income, which means that it is not taxed. Better, he pays interest HELOC can be used to offset other income can get.

4) Tax Payer Money. It is highly unlikely, but possible. When Mark Zuckerberg showed revenues between $ 1 and $ 13.650 (2011 tables), he may qualify for the earned income tax credit, even without children. It sounds ridiculous, but there it is. up to three children, she could collect up to $ 5,751 dollars per EIC year, as well as Medicaid and Food Stamp benefits.

Now, this is not to say that Mark Zuckerberg wanted to do these things, except maybe # 1. However, once you make your bones Zuckerberg in business levels, changes possible. Planning to change. You do not have to worry about things that many “normal” people are worried. You do not care if the W-2s come. Regarding to the cost of your checks bounce. And, you can not plan your tax strategy considers “normal people” as mortgage interest, charitable contributions and the cost of the job hunt. This item is used, but this is not the core of your strategy.

Add a zero at the end of your numbers allows you to reduce the number of most “normal people” are worried about a dollar, and still build the kingdom.

Also, you can give it.

On December 9, 2010, Mark Zuckerberg, along with Bill Gates and Warren Buffett signed a “promise of Giving” in which they pledged to give at least half of their wealth to charity over time. He was listed in the Top Twenty Most Powerful People of the World Forbe (Gates # 5, # 9 Zuckerberg, Buffett # 20). They can do a lot in the world with a combination of wealth and influence they hold. Gates, for example, has long taken the eradication of malaria from the Earth as a personal mission. And, in the last 10 years, the incidence of malaria in the world will be 20%.

For big ticket financial advisor said, “The more you stay, the more you can give.”