Facebook CEO and newlywed Mark Zuckerberg will take a $1 salary in 2013, and likewise forgo cash and stock bonuses, as well the use of Facebook services, including aircraft and financial and estate planning for his personal use – all to save on taxes.
Other notable tech execs who receive a $1 salary include Apple’s late Steve Jobs, Oracle’s Larry Ellison, HP’s Meg Whitman, and Google leaders Sergey Brin, Larry Page and Eric Schmidt. Executives do this sort of thing to fall into different tax brackets. Zuckerberg’s salary in 2012 is $600,000, up from $500,000 in 2011, which has a payroll tax of 35%. Though, with a $1 salary and stock options instead, he only pays a capital gains tax, which is 15% at present.
There’s a common belief that the wealthy sometimes live off interest, but in Zuckerberg’s case, it would be better to live off debt and municipal bonds. He could get a home equity line of credit, which isn’t taxable, and live off of that, while his stocks grow. And interest on said equity can offset any separate income.
There’s been a lot of speculation concerning why Facebook’s stock hasn’t skyrocketed since the Friday IPO. NASDAQ reporting errors, poor ad monetization, hoodies, weddings, etc., were all mentioned. When it comes down to it, it would appear that Facebook set the initial price of the stock too high. Realistically, a company with over 900 million “customers” isn’t exactly going anywhere anytime soon. It will be interesting to see how Facebook stock does after posting its earnings report in the coming months. For extensive coverage on Facebook’s IPO, go here.