ChiaFong

Would you be willing to be a CEO that earn US$1 annually?

In Personal on 5 June, 2006 at 3:00 pm

I would.  So would Yahoo’s chairman and chief executive (CEO) Terry Semel and Google’s CEO Eric Schmidt or even Google’s co-founders Larry Page and Sergey Brin.  They all earn US$1 annually.  Why would they do that?  That’s because instead of an actual decent annual salary, they are getting their pay through stock option.

Terry Semel has since raked US$429 million for the past three years by selling 18.1 million of his stock option.  He was able to do this because ever since he took over as CEO of Yahoo, the share price has increased 3 fold.  By accepting a pay cut from US$600,000 annually to just US$1 annually, he get another 6 million stock options at an exercise price of US$31.59 – the closing price on the Nasdaq last Wednesday.  Google’s CEO and 2 co-founders has also rake in millions of dollars through stock option.

This way of rewarding CEO has the effect of pushing CEO to make sure that the company will keep on growing.  If not their stock options will just be some form of waste papers.  Thus their pay will really go down to just US$1.

P.S.  Its 4 days to the World Cup!!!

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