The first CEO who did this was Lee Iacocca in the 70’s after the government bailed out Chrysler and since then everyone who has done it has been trying to do damage control from some debacle or another. The whole point of doing it is to get media attention and the $1 thing is a nice hook that makes an interesting story. And it plays good in Topeka-- who hasn’t done the whole “buy Grandma’s old Buick for $1” thing or transfered the family farm for $20? It makes the CEO’s look like they’re in a family-type relationship with their companies and that they’d work for nothing if it weren’t for those darn lawyers.
Especially back during the .com days, there were plenty of executives who were working for nothing but stock and seemed to be able to do so without any problems. I also seriously doubt that any court would seriously consider $1 consideration, but not an extravagant suite of stock options and benefits.
First off, you are obviously simplifying a lot, because consideration is not such a simple subject. Contracts are not very obvious, and considetation aspect is a hugely complex ball of wax, without quite as much definition in the caselaw as a lot of people might like. This is why simple remuneration contracts are so very nice.
Insurance, by the way, may be offered to the individual, but the corporation’s portion of the plan is not always be obvious or legally binding as consideration. It’s the employee’s contribution that’s easily costed - but that has no direct legal relationship to the employer. Indeed, the company might not pay anything, but simply act as the administrator of the plan. And administering the plan and even bargaining for it (well before many employees would have been hired) is pretty long-distance to count as consideration.
Oddly enough, the $1 salary ruse often raises less suspicions that no salary. If someone is paid no salary, the first thought of many people is how else are they being “compensated”? If someone is paid $1, it leads many people to believe salary is the main (or sole) form of compensation. This does not fool everyone, but apparently enough to warrant its continued use by PR departments.
Not even close. It was a WWII thing. wiki "
*The “Dollar-a-year men” were business executives who helped the government to drive the US national economy during periods of war, especially during World War I. US law forbids the government from accepting free services from anyone; accordingly, capable men who are effectively volunteering their services have nevertheless to be paid some salary however nominal. Typically these individuals are paid one dollar a year for their work."
*
However, wiki goes on to say *"Several top executives in large businesses receive a salary of one dollar. In place of a salary, the executives receive stock options.[1][2] The first executive to receive $1 in salary was Lee Iacocca as chairman of Chrysler in 1978, as part of a move in cost-cutting. This approach reduces personal tax liability because, under current U.S. tax law, salary income is taxed at a significantly higher rate (currently up to 35%) than the capital gains tax (currently a maximum of 15%) applied to profits arising from the sale of stock grants if the stock is held for enough time before being sold to be considered long term capital gains. Otherwise it is taxed as short term gains, which incur the same rates as regular income.
Executives argue that remuneration through stock instead of salary ties management performance to their financial benefits.[1] The assumption is that stock prices will reflect the actual value of a company, which reflect the management performance of the company.*
So the real reason is taxes. The reason for the $1 vs $0 seems to be tradition, based upon US Law.
Come back a year later and chances are the person’s salary is back to where it was, if not better. It’s a marketing gimmick at the time to promote a false sense of solidarity with the workers slaving all those hours just to make ends meet (well, at least those who were not laid off). The CEO makes a big publicity stunt with the $1 annual salary (free advertising for the company courtesy of a complicit media) but nary is there a mention of the CEO’s other compensation, or innate wealth that will sustain him/her for the year.
