Whenever a CEO wants to convince shareholders and the media that they care about their long-suffering workers, all they have to do is slash their hefty salaries to $1. It does not seem to do much good because the executives who have taken such pay cuts already are fabulously wealthy, so money is not much of a motivating factor.
Take Rick Wagoner, the recently fired General Motors Corp. (GM) chief executive, who agreed late last year to accept a $1 a year salary, along with his counterpart at Ford Motor Co. (F) Alan Mulally. Chrysler L.L.C.'s Robert Nardelli agreed to take a $1 in pay when he joined the struggling automaker in 2007. Of course, he does not need the money thanks to the $210 million golden parachute he got after being forced out of Home Depot Inc. (HD).
American International Group Inc. (AIG) chief executive Edward Liddy was repeatedly praised by Congress for taking only $1 in salary. Liddy also does not need the money. In 2006, during his last year running Allstate Corp. (ALL), he was paid $1.2 million in 2006, plus $16 million in nonsalary compensation and $16.5 million from exercising option awards during the year. Liddy also is eligible for a bonus for extraordinary performance next year.
The financial services firms heads are also members of the $1 club, including Citigroup Inc.'s (C) Vikram Pandit. Actually, Pandit got close to $11 million in total compensation, something he did not make crystal clear in his recent testimony before Congress. He will take a buck salary until New York-based Citigroup returns to profitability.
Like his colleagues, Pandit sold his Old Lane Partners for $800 million to Citigroup and as DealBook noted "after Citigroup shuttered the fund last year, Mr. Pandit transferred cash proceeds of about $79.7 million into Citigroup's private bank."
Having CEOs work for $1 is a silly public relations stunt that seems to do little to motivate them to do any more or less than they would have done otherwise. Many, such as GM's Wagoner, are so out of touch already that the salary they are paid is meaningless.
"While General Motors lost more than $84 billion during the past six years, the president of the company, Rick Wagoner collected well over $50 million in compensation," according to RadarOnline. Wagoner's retirement package, for instance, is worth $20 million. He also has lived well as his company bled money and shed tens of thousands of jobs.
Wagoner and his wife live in an 8,200 square foot home with six bedrooms and seven bathrooms along with a 1,200-square foot garage.
Now that's stretching a dollar.
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