By Mina Kimes, writer
FORTUNE -- A CEO who accepts an annual salary of $1 sends a powerful message -- namely, that he or she is a team player who wants to make a sacrifice for the good of the company. True, the executive is probably receiving generous stock options on the side, but those payments depend on the corporation's success. The buck-a-year salary is a grand gesture, intended to broadcast the CEO's confidence in the future of the business.
It may also be a smokescreen. A recent study by Professors Gilberto Loureiro, Anil K. Makhija, and Dan Zhang says that, in many cases, $1 paydays are nothing more than public relations ploys: "We find evidence consistent with the view that $1 CEO salaries are a ruse hiding the rent-seeking pursuits of CEOs adopting these pay schemes," they wrote. "Thus, rather than being the sacrificial acts they are projected to be, our findings suggest that adoptions of $1 CEO salaries are opportunistic behavior of the wealthier, more overconfident, influential CEOs."
The $1 salary was pioneered by former Chrysler head Lee Iacocca, who slashed his pay in the late 1970s while the struggling car company lobbied the government for help. Other CEOs followed suit: Nelson Peltz of Wendy's/Arby's Group (WEN), Sumner Redstone of CBS (CBS), and a flurry of tech executives including Apple's (AAPL) Steve Jobs, Oracle's (ORCL) Larry Ellison, and Cisco's (CSCO) John Chambers. More
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