A number of top executives in large businesses and governments have worked for a one-dollar salary.[1][2][3] One-dollar salaries are used in situations where an executive wishes to work without direct compensation, but for legal reasons must receive a payment above zero, so as to distinguish them from a
volunteer. The concept first emerged in the early 1900s, where various leaders of industry in the United States offered their services to the government during times of war. Later, in the late 1990s and early 2000s, many business executives began accepting one-dollar salaries—often in the case of struggling companies or startups—with the potential for further indirect earnings as the result of their ownership of
stock. Many choose to reduce their salary so they can avoid income taxes.[4]
Dollar-a-year men
In the early-to-mid-20th century, "dollar-a-year men" were business and government executives who helped the government mobilize and manage American industry during periods of war, notably
World War I,
World War II, and the
Korean War. U.S. law forbids the government from accepting the services of unpaid volunteers.[5] Those employed by the government had to be paid a nominal salary, and the salary establishes their legal relationship as employees of the government.[6] During World War I, about 1,000 such people were employed by the United States.[7] While they received only a dollar in salary from the government, most executives had their salaries paid by the companies.
The first known such employee was
Gifford Pinchot, working for Theodore Roosevelt. After Pinchot, the
United States Department of Agriculture employed several dollar-a-year men.[8] On June 19, 1933,
Frances Perkins, Secretary of Labor appointed a five-member Labor Advisory Board, of whom two members came from the
Amalgamated Clothing Workers union, of whom one,
Sidney Hillman, was a dollar-a-year man.[9] Progressive lawyer
Max Lowenthal was a dollar-a-year man as legal counsel on various congressional committees, befriended U.S. Senator
Harry S. Truman, and wound up as a dollar-a-year man in President Truman's cabinet.[citation needed]
Some recent one-dollar salary earners worked in government as well, most notably former California governor
Arnold Schwarzenegger,[20] former Massachusetts governor
Mitt Romney,[21] and former New York City mayor
Michael Bloomberg.
After promising to take only a dollar a year in November 2016, former U.S. President
Donald Trump donated the first three months of his salary to the
National Park Service and stated plans to donate all of his salary during the term.[22][23][24][25] Since then, President Trump donated his salary to various Federal Departments, fulfilling his campaign promise to do so.[26]
In 2015, then 15-year-old Corbin Duncan petitioned the Australian Prime Minister,
Malcolm Turnbull, to take up a $1 salary.[27] The petition was unsuccessful but gained international media coverage.[28]
Instances of alternative compensation
While many executives who take a one-dollar salary also choose not to take any other forms of compensation, a number earn millions more in bonuses and/or other forms of compensation. For example, in 2010–11
Oracle's founder and CEO
Larry Ellison made only $1 in salary, but earned over $77 million in other forms of compensation.[29]
In some cases, in lieu of a salary, the executives receive
stock options.[30][31] In the United States, this approach impacts
personal taxliability, because although stock and option grants are taxed at federal income rates, they may be exempt from some portion of
payroll taxes (typically 7.65%) used to fund
Social Security and
Medicare.[32]
Executives argue that remuneration through stock instead of salary ties management performance to their financial benefits.[30] The assumption is that stock prices will reflect the actual value of a company, which reflect the management performance of the company. Detractors argue that this incentive may drive short-term planning over long-term planning.[33]
Notable one-dollar salary earners
The following people have been employed for annual salaries of one dollar:
Reagan, Michael D. (1959). Serving two masters: Problems in the employment of dollar-a-year and without compensation personnel (PhD dissertation). Princeton University.
Cuff, Robert D. (1967). "A 'Dollar-a-Year Man' in Government: George N. Peek and the War Industries Board". The Business History Review. 41 (4): 404–420.
doi:
10.2307/3112648.
JSTOR3112648.
S2CID154842124.