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Mark Zuckerberg Dropped His Annual Salary to $1

The 29-year-old Facebook CEO is following in the footsteps of Apple's Steve Jobs, and Google's Larry Page and Sergey Brin, by claiming only a nominal salary.
 Mark Zuckerberg at Barcelona conference, Feb. 24, 2014.
 
 

In 2013, Facebook CEO Mark Zuckerberg only earned a buck. Going by salary at least, he earned just $1 for the year, according to a regulatory filing released on Monday. Zuckerberg voluntarily dropped his salary to $1 and by doing so has joined the symbolic $1-a-year club for CEOs like Steve Jobs and Google co-founders Larry Page and Sergey Brin.

"It's not exactly like he's making a massive financial sacrifice," says Mike Santoli, senior columnist at Yahoo Finance, about Zuckerberg's $1 dollar annual salary. "It's sort of a gesture to the world to say 'we're not going to sit here and loot the company that we're trying to run for the long term at the same time that we are stacking up wealth.'"

Sergey Brin and Larry Page, worth roughly $30 billion a piece, have been drawing a $1 salary for a decade now.

Technology moguls claim symbolic annual salary of $1 after they are already wealthy. In Silicon Valley earning a token salary is a sure sign that you now belong to a group of elite business leaders. Apple Inc.’s late co-founder Steve Jobs helped popularize the practice, which was continued by Page, Brin and now Zuckerberg. All own substantial equity stakes in their own companies, making a salary irrelevant.

Nevertheless, Zuckerberg made $1.99 million overall in 2012 compared to $653,165 last year of which Facebook CEO and his guests ran up a $650,000 bill using private jets for non-work trips. The company paid the bill to ensure his personal security.

Zuckerberg also reaped $3.3 billion from exercising stock options last year.

The 29 year old who is also the 22nd richest person in the world according to the Bloomberg Billionaires Index, is still the leading shareholder in the business he started in his college dorm room, with a fortune of $26.7 billion, according to Forbes.

As we can see, salaries don't really mean anything for Silicon Valley elites. It's really all about the IPO and number of company shares.

Tech executives like Zuckerberg prefer to pay themselves low salaries in order to increase the company's profits as much as possible. When the company maximizes profits it in turn increases the overall value of their stock holdings which is where the executive's true wealth comes from.

 “The dollar salary really for them is meant to signify that they have large stakes in their company. The value they’re going to receive – the compensation they’ll earn – is coming solely from their stock,” says Aaron Boyd, director of governance for Equilar, to Forbes. “You’re not going to question whether or not Larry Page is interested in growing a company’s stock as a shareholder. As one of the largest shareholders, he’s all in.”

While Zuckerberg is racking up big bucks from the stock options he exercised, he is also one of the major philanthropists in the valley: he gifted 18 million shares to charity last year and was named the most charitable person of 2013 by The Chronicle.

Another favorite activity of the Facebook CEO is  spending billions on acquisitions. In late February Facebook paid $19 billion to buy the WhatsApp messaging service, which is equivalent to $42 per user. In March, Facebook announced the $2 billion purchase of Oculus VR, which makes virtual reality headsets for gaming. At the time, Zuckerberg said he hopes to expand Oculus beyond gaming into a platform that can create real experiences with your online connections.

"We feel we're in a position where we can start focusing on what platforms will come next to enable even more useful, entertaining and personal experiences," Zuckerberg explained in a statement about the acquisition.

"Right now it's at such a valuation where they have to reap a massive amount of advertising revenue in the future [and] nobody one can really see how these little bets on the side are going to help that mission," Santoli explains. 

Meanwhile, Facebook COO Sheryl Sandberg earned $16.2 million last year compared to $26.2 million in 2012. Facebook CFO David Ebersman made $10.5 million, VP David Fischer earned $8 million and CTO Mike Schroepfer made $12.6 million.



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