Who gets the big bucks in tech ?
Mayer, whose pay was disclosed in a regulatory filing this week, earned a total of $26.9m last year - down 26.5% from $36.6m in 2012 - yet her base salary has more than doubled to $1m, according to company filings.
Mayer’s former number two Henrique de Castro, who left Yahoo’s chief operating officer position in January this year, eclipsed Mayer by earning $39.2m in 2012 and $10.9m in 2013. He walked out with $20m in stock bonuses.Yahoo's chief executive Marissa Mayer is not the company’s highest paid employee, but Meyer is not alone is taking a symbolically lower pay packet than some key members of her executive staff.
Silicon Valley's chief executives are often not the highest paid employee despite shouldering the most responsibility, but often have more invested in the company than just a pay cheque at the end of the month.
Mark Zuckerberg might be a billionaire, and 22nd richest person in the world according to the Bloomberg Billionaire Index, but his salary isn’t the source of his enormous bank balance. He joined the exclusive “$1 CEO club” in 2013, which reduced his salary to just one dollar down from a base salary of over $500,000 in 2012, and will not receive any bonus.
In contrast, Sheryl Sandberg, Zuckerberg’s number two and Facebook’s chief operating officer, earned $16.2m in 2013 and briefly become one of the world's youngest billionaires in January, though a drop in Facebook's share price meant she lost that status in April.
Facebook’s chief financial officer David Ebersman unsurprisingly earns more than one dollar, raking in a total of $10.5m in 2013, while chief technology officer Mike Schroepfer earned $12.8m in the same year.
Both Google founders joined the $1 salary club in 2004 when the company went public, with Sergey Brin and Larry Page requesting their annual salaries be reduced from $150,000 to just $1. At the time Eric Schmidt was Google’s chief executive earning $250,000 a year.
Now chief executive, Page still earns just $1, while Google’s advertising business head Nikesh Arora earns $46.7m in 2013. Chief financial officer Patrick Pichette earned $38.7m last year, followed by Google’s chief legal officer David Drummond earned $31.3m in 2013.
The father of the $1 salary was Steve Jobs, who took the pay cut in 1997 and rarely took a bonus or other compensation during his second term at Apple.
Unsurprisingly, Tim Cook then earned more in salary than Jobs, but didn't opt for the symbolic pay cut - earning $4.2m in 2013. Cook’s pay packet was boosted by stock options from Apple worth $376.2m, paid by Cupertino-based company every two years and putting him ahead of Apple’s chief financial officer Peter Oppenheimer, who earned $68.6m.
Microsoft’s 2013 wasn’t a great year for the company, with weak Windows 8 and Surface tablet sales, yet chief executive Steve Ballmer still took home $1.26m before he stepped aside for the appointment of Satya Nadella.
In the same year, Ballmer was dwarfed by his number two, chief operating officer B. Kevin Turner, who took home total earnings of $10.4m. Microsoft’s new chief executive Nadella won’t be beaten quite as easily, however, with an estimated $18m waiting for him for the year, if all goes well.
Not quite in the $1 club, Twitter’s chief executive Dick Costolo took home just $130,250 in 2013, with a base salary of $14,000, after the company went public generating $1.82bn.
In contrast, Twitter’s chief financial officer Mike Gupta took home $24.6m in 2013 as Twitter’s highest paid executive - even more than $11.5 million Costolo earned in 2012.
Despite earning just $1 in base salary, Oracle’s chief executive Larry Ellison is one of the Valley's more ostentatious executives, frequently featuring in the top paid chief executives across the board not just in technology.
Ellison took home $78.4m in 2013, but that was down 18% on 2012’s $96.2 pay packet after Oracle missed some of its annual targets. As a result, Ellison ranks eight in Bloomberg’s Billionaires Index, worth $41.8bn, and was the highest paid chief executive in the US in 2013.
One of the reasons that the reported base salaries are often low for top executives at technology companies is the use of bonuses and stock, but even then, the people at the top of the tree are often more invested in the company’s success than simply reaching their maximum pay packets.
Executives often have a large proportion of their earnings paid in company stock, which ensures that the company’s top brass have a vested interest in company performance that is more in-line with shareholders and board members, rather than simply hitting targets for bonuses.
“With a large chunk of equity, salaries are much less important. By making the compensation in-line the company’s share price, the senior management’s self-interest is mostly aligned with shareholder value,” explained Ian Maude of Enders Analysis.
Even those that take just $1 and do not take any bonuses or additional pay from the companies they head are hardly destitute. Most are paid by increasing value of their existing stock in the company they run, and are worth billions because of it.
“What you’re talking about here is a bunch of people who are not exactly worried about where they’re going to find the money to pay the mortgage at the end of the month, which is why some can take such low salaries and simply be paid by their stock ownership in the company,” said Maude.
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