Friday, July 6, 2007

A handful of chief executive officers take home a salary of $1 a year or less. But all of them manage to make millions of dollars anyway, illustrating the point that if you are running the show, your salary doesn’t mean much.

“Salary has become such a minuscule component of CEO compensation that it is now largely irrelevant,” said J. Richard Finlay, founder of the Centre for Corporate & Public Governance in Toronto.

Of the 386 Standard & Poor’s 500 CEOs whose companies reported under the Securities and Exchange Commission’s expanded disclosure requirements this year, salary accounted for 9.5 percent of total pay. For the 11 CEOs in the group who earned more than $30 million, salary was just 2.7 percent of total pay.

In the group, the CEOs with the smallest salaries were:

c Terry Considine, chairman, president and CEO of Apartment Investment & Management. He reported a salary of zero, although footnotes in the company’s proxy statement show that he received stock options valued at $600,000 as his base salary. Mr. Considine’s total pay, as calculated by the Associated Press, was $4.8 million in 2006.

c Richard D. Fairbank, president and CEO of Capital One Financial Corp. in McLean, also had zero salary, as well as no bonus. But he was awarded $18 million worth of stock options.

Since 1997, Mr. Fairbank has been paid almost entirely in stock and options, which are pegged to Capital One’s long-term performance. The company’s proxy statement said the board’s compensation committee thinks this is “the mechanism that most aligns the CEO’s financial rewards to the value he delivers to stockholders.”

Mr. Fairbank has 5.9 million unexercised options, as well as unearned shares and options that have not vested that the company values at $27.3 million.

c James Rogers, president and CEO of Duke Energy Corp., received no salary in 2006. But like Mr. Fairbank, he receives most of his compensation in stock and options. His total pay for 2006 was $27.5 million.

c Eric Schmidt, CEO of Google Inc., took home exactly $1 in salary. And his overall compensation totaled $557,466, a fraction of the $71.7 million granted last year to competitor Yahoo Inc. CEO Terry Semel, the No. 1 executive on the AP pay list.

Almost all of Mr. Schmidt’s package covered the cost of $532,755 for personal security. Mr. Schmidt, with Google’s founders, Larry Page and Sergey Brin, has refused to take anything more than a token paycheck for the past three years to promote an egalitarian spirit at the company.

But all three own handsome stock stakes in the company. Mr. Schmidt owns 10.7 million shares currently worth $5.5 billion.

Another $1-a-year CEO is Apple’s Steve Jobs, who has been treading water at that level for the past three years. But Mr. Jobs also owns more than 5.4 million Apple shares worth more than $660 million.

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