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Forward Thinking: Are $1 CEO salaries a sign of deeper problems?

Summary

CEOs who accept $1 annual salaries may have underlying PR problems, Bloomberg BusinessWeek reported on June 1. A recent study of 50 CEOs who made $1 or less working for publicly listed companies found that the grand gesture can be a smokescreen. Thanks to equity-based pay like stock options, the executives often earn as much as their peers. A $1 salary is intended to broadcast the CEO’s confidence in the business. However, the study, by professors at the Ohio State University, found evidence supporting the view that “$1 CEO salaries are a ruse,” calling them the “opportunistic behavior of wealthier, more overconfident, influential CEOs.”

The study found that companies that cut CEO pay often lacked significant growth opportunities, and the CEOs themselves had issues rendering them vulnerable to public outrage, such as pending government inquiries, corporate underperformance and personal dilemmas.

An article writer for more than 20 years and a frequent Tactics contributor, Chicago-based Greg Beaubien has forgotten most of the formal rules and mostly relies on gut instinct when he writes. Twitter @GregBeaubien

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