CEO Perks
Loss of Loyalty Although it used to be customary for upper-management employees to
stick with a single company for much of their lives, this tradition
changed in the 1980s. Since then, executives have been more willing to
switch companies for better offers. This trend has contributed to
higher salaries for executives as companies make bids for the best
candidates on the job market [source: Knowledge@Wharton]. |
Steve Jobs, the CEO of Apple whose health we discussed on a previous page, is a pretty notable exception when it comes to high CEO salaries. Apple pays him $1 a year. You read that right: a single dollar. But don't feel too badly for him; he actually takes home a whole lot more than that and is reportedly worth billions [source: Knowledge@Wharton]. That's because in lieu of a traditional paycheck, Jobs receives stock options that allow him to cash in on the success of the company.
As Jobs' case clearly illustrates, CEO compensation is more than just salary. Actually, most top earners receive the bulk of their take-home pay from stock options. Larry Ellison, CEO of Oracle Corporation and the top-paid CEO of 2007, received a cool $182 million in stock options and a mere million from his salary [source: DeCarlo]. In addition to stock options, CEOs often get hefty bonuses, privileges to use company-paid perks (like private jets) and large contributions to their retirement plans. And although this is great news for CEOs, it gives researchers quite a headache. Because compensation takes so many forms, those who want to analyze, compare and determine CEO compensation find it a daunting task.
Overall, it's important to take sensationalized reports of a CEO's high salary with a grain of salt. It can be difficult to estimate his or her value to a company and to guess the various factors that go into the board's difficult decision of determining salary.
If you want more on the spoken and unspoken rules that govern a company, browse the links on the next page.
