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Google Execs Happy With $1 Salaries
DarkClown writes "ZDNet is on the one hand reporting that Google execs will keep their $1 salaries again this year, and on the other hand is reporting that the executives cashed in more than $160 million worth of stock last month." From the stock article: "Since the search giant went public in August 2004, Brin has sold about 6.5 million shares at a market value of $1.68 billion. Page has sold about 5.8 million shares at a market value of $1.4 billion, according to calculations from Thomson Financial. Chief Executive Eric Schmidt, who was brought in to run the company before it went public, has sold more than 2.1 million shares, worth more than $502 million." They could be getting a multi-million dollar salary *and* the stock money. Good faith efforts go a long way in my book.
But can we really say it's some amazing piece of good faith that they settled ONLY for 1.4 billion dollars in salary for the year?
Can we honestly say "good faith" is their motive and not income tax?
In addition to the billions they are making from their stock, their $1 salaries also allow them to qualify for food stamps. Just another perk...
Unknown host pong.
I believe that Capital Gains Tax is higher than Income Tax (at least from personal experience). I'd be willing to believe "Good Faith" based on that.
"Oh my God. This is terrible. This is the end of my Presidency. I'm fucked."; ~ Donald J. Trump
So, do they divy their one dollar up into bimonthly pay checks?
The news here is that the executives are selling their stock -- not normally considered a show of faith in the company. Brin and Page have each dumped over a billion dollars worth, and Schmidt another half-billion.
What I'm listening to now on Pandora...
In this case, the Google founders and executives are cashing in on their IPO. It's not really the same as the typical salary to stock option crap that's going around. Let's face it, if you could get paid via capital gains (15% tax rate, until it's not taxed at all...) instead of salary (38% tax rate), why would you want a salary?
Make dividends and true stock investments (investing in IPOs, new stock offerings, and startup stock payments) taxable at the capital gains rate and revert all the daytrading/recycled stock profits to the full tax rate; it will benefit new technologies and put the brakes on silly speculation trading (read: gambling for the rich).
Let us live so that when we come to die, even the undertaker will be sorry -- Mark Twain
Minimum wage laws refer to people making an hourly wage, "non-management" workers.
500GB of disk, 5TB of transfer, $5.95/mo
It isn't about tax evasion or good faith. It's a way to link productivity to company success. If stocks are high, they make more money, if they aren't they make less. Many companies have started doing similar things, as linking rewards to success is far more profitable for everyone. Shareholders benefit greatly, as the leadership has more invested in the company, so is more focused on its success. Paying someone a 500 million/yr salary with no difference if they do well or poorly leads to poor results. It's basic economics and psychology: proper motivation results in proper rewards.
Microsoft Sucks, F/OSS Rocks. I get mod points now right?
I believe that Capital Gains Tax is higher than Income Tax
OK. What about Google's payroll tax liability?
There is a difference between Stock, and Stock Options. These guys aren't just the CEO's, they are the founders. When they sell off stock, they are selling off their parts of the company they founded. You know, the one you use every day for searching, that has enriched your internet experience. Presumably they and their investors have some split of the available stock, and they are simply adjusting this ratio more toward the investors. They could quit tomorrow, and STILL sell that stock, or keep it, and just live off the work they've already done.
The point is, they aren't being PAID in stock (That's not part of their current salary, reimbursement for their current work), that is the reward they have for risking their money, work, and reputations building this thing called Google in the first place.
Where are we going, and why am I in this handbasket?
Or to be more truthful-- another day another 0.0027378507871321013004791238877481 cents
Aren't they supposed to be paid minimum wage?
crazy dynamite monkey
I think you are missing the entire point. Most executives don't opt for similiar salaries, because they don't have faith in the stock price of the company. If I am an executive of a company where the value of the stock GOES DOWN, I could be making a whole lot of nothing if I am only paid in stock.
You have to be pretty confident in the value of your company to accept stock as payment.
>
> But not income tax, which is what the parent mentioned. They probably pay the (much lower) long-term captial gains tax.
In Kalifornistan, all income - salary, interest, dividends, and both short-term and long-term capital gains - is taxed by the State as well as the Federal government. Every dollar earned over $40000 is taxed at 9.3%. (Every buck over $1M is taxed at 10.3% starting January 1, 2006.)
So if you have, say, a $400M capital gain on a $500M hunk of stock, the Feds take $60M (to build a quarter of a bridge to nowhere in Alaska, or to blow up some Arabs), and Ahnold takes an extra $37M in state taxes (for the pensions purchased by the various government employees union' under the previous administration in exchange for campaign donations.)
And since the AMT threshold is measured in thousands of dollars, no, you can't deduct the $37M in state taxes from your Federal return, because you're so far beyond the AMT threshold that your accountant can't even see the AMT threshold without very long baseline interferometry.
Ask yourself what the various levels of government have done to earn a quarter of the wealth spawned by Google.
This isn't a right-vs-left issue. Wouldn't most Democrats be a little happier if the government wasn't able to take a huge chunk of your wealth in order to buy bombs to drop on brown people? And wouldn't most Republicans be a little happier of the government didn't take the rest of your money to spend on government employees' unions and welfare queens?
Hi I work for the RIAA, and I don't understand what this is about? My brain explodes every time I read it, but we have a fresh supply of donor monkies.
So could anyone give me a quick synopsis of how this one-dollar pay thingie works. Add supported synopsis is OK.
If you don't know what AltaVista is (was), get off my lawn.
Ask yourself what the various levels of government have done to earn a quarter of the wealth spawned by Google.
On top of all the standard responses (cops, roads, an army, etc), they built the Internet, without which Google couldn't exist.
I don't fault the Google guys for their compensation or their decision to try and defer some tax issues. Hell, I don't even fault them for turning their pseudo-salaries into a miniature news event. They're in the business of growing Google, and part of that is playing up the "Google mystique."
Yeah, they make a lot of money no matter how you count it. But you know what? So can you, if you come up with an idea that's good enough and get people to buy into it.
We should look upon home-run successes like Google for inspiration, not class jealousy.
"It was a summer's tale: Just a boy, his Linux, and a head full of dreams..."
I'd never want another dime if I had that much. Hell, I could give half of it away, live off the interest, and give away most of the interest, and still live happily ever after. The headline "Google Execs Happy with $1 Salaries" is a gigantic DUH considering how much loot they have already. Working in a job they love in what has to be a relaxed, comfortable atmosphere doesn't hurt either, I'd guess.
Article moderation: -1 Duh.
These guys started at the bottom of the pile, right? Just like the great majority of us, they were workers. Then they had a great idea, and now years later, they're billionaires because of it. It's the american dream. Why does everyone assume that just because they've made money they've turned to the dark side? 99% of you put in the same position wouldn't be turning down the billion dollars from stock sales. You'd have earned it fair and square, and you'd be very happy with yourself. I'm happy for them too, they've created probably -the- most useful tool on the internet, IMHO. Dave
Specialization is for insects. -Heinlein
What they've effectively done is told their employees: We care about the company
actually what I gather is they told the employees "we care about Wall Street" which can be quite different from caring about the company (lay off half of your workforce and outsource and the stock will go up, be conservative with your numbers and projected earnings and the stock will go down).
I personally wish the stock market just disappeared, but fat chance of that happening.
-- the cake is a lie
that some CEOs get for getting fired that really pisses me off!
Enron. Enron. Enron. Ummm... Enron?
Does anybody here really believe that a CEO's perspective changes if they get a $1 salary versus a multi-million dollar salary when they have a ton of stock and options? Good CEO's will feel a vested interest in the company's performance, and bad CEO's will not. Awarding them scads of cash may keep them on board with your company, but that's all it buys you.
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Since Bush's tax cuts, Capital Gains tax on any stocks held over 1 year is a paltry 15%.
I make next to nothing, and I pay more income tax than that.
It's not what you know, or even who you know- It's how many people recognize your damn
If I was an employee of Google and my stock options were worth over a couple of million, I would dump and run.
This is precisely why you can only dream of having a couple million. The people you mention became rich because, among other things, they love what they do.
Capital gains tax rates are higher than income tax.
7 ,00.html):
And you're higher than a kite!
From the IRS (http://www.irs.gov/taxtopics/tc409.html):
"You may have to report capital gains and losses on Form 1040, Schedule D (PDF) . If you have a net capital gain, that gain may be taxed at a lower tax rate. The term "net capital gain" means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. The highest tax rate on a net capital gain is generally 15% (or 5%, if it would otherwise be taxed at 15% or less). There are 3 exceptions:
The taxable part of a gain from qualified small business stock is taxed at a maximum 28% rate.
Net capital gain from selling collectibles such as coins or art is taxed at a maximum 28% rate.
The part of any net capital gain from selling Section 1250 real property that is due to recapture of straight-line depreciation is taxed at a maximum 25% rate. "
The important part is that your long term capital gains are pegged based on your tax bracket. If you would normally pay more than 15% in taxes, your capital gains are 15%. If you would pay less, you pay only 5%. Short term capital gains are just figured as normal income and taxed as below.
And here are the tax schedules (http://www.irs.gov/formspubs/article/0,,id=13351
"If taxable income is over-- But not over-- The tax is:
$0 $7,300 10% of the amount over $0
$7,300 $29,700 $730 plus 15% of the amount over 7,300
$29,700 $71,950 $4,090.00 plus 25% of the amount over 29,700
$71,950 $150,150 $14,652.50 plus 28% of the amount over 71,950
$150,150 $326,450 $36,548.50 plus 33% of the amount over 150,150
$326,450 no limit $94,727.50 plus 35% of the amount over 326,450 "
So, if you earn $1 billion from the sale of stock held over one year, with only $1 dollar in actual income, you pay ($1 billion * 5%) $50 million (since the tax rate on $1 is 10%, which is less than 15%). If, however, you earned a $1 million salary, then cashed out $1 billion in stock, you'd pay ($1 billion * 15% = $150 million) + ($94,727.50 + (1 million - 326,450)*35% = $330,470) = $150,330,470.
By paying themselves $1 per year, they saved themselves over $100 million. Yeah, it was completely altruistic. Altruistic like a fox!
God invented whiskey so the Irish would not rule the world.
...Capital Gains tax on any stocks held over 1 year is a paltry 15%.
If you hang on to if for less than a year, you tack the amount to your income and pay that rate. Holding it for 12 months helps, as that 'income' gets taxed at a fixed rate rather than what you make at a normal income. But no worries on the tax front. Once you break a certain threshold where you get to play with the glorious ATM (alternative minimum tax) codes, which these guys certainly hit... No changes there at all...
+++ UGUCAUCGUAUUUCU
"Ask yourself what the various levels of government have done to earn a quarter of the wealth spawned by Google."
Well I don't know how much of the following justifies the government taxation, but it certainly lists ways in which the government has assisted Google.
Firstly, Brin & Page were grad students at Stanford, recieving their undergraduate education from publicly funded Universities and reciving federal grant money to do the fundamental research that made Google what it is today. Part of their success revolves around being at the right place at the right time, but another part is that they had the opportunity to solve a problem first, and come up with the money strategy second, rather than the other way around. Because they a quality education and the government paid opportunity to study interesting problems, they were able to create an enourmous amount of weath, for themselves and for society. Hell, even Stanford operates on the charity of a former governor, rather than a series of well informed and rational choices made by students. And I think it's fair to say they still recieve a good sum of money in the form of federal research grants.
Second, Google exists to search the vast amount of information available over the Internet. For Internet Libertarians, the funding behind DARPAnet and even the development of HTML has to be a strange paradox. Certainly, there are plenty of governments under which the free dissemination, indexing and ranking of communications is not welcome. If I wished to be misleading, I might say that the Libertarian camp is divided over the issue -- there are as many Libertarian governments in favor of internet censorship as there are opposed!
Thirdly, Google the corporate entity benefits from a large number of local, state and federal services. The SEC provided them with a framework within which they could safely offer a number of shares for initial public offering, even in a unique way (despite complaints from many within the private sector), and gives shareholders confidence that the reports they read are accurate and should the need or desire arise, they can get a fair market price for their stock. The legal system provides Google with a fair and impartial jurisdiction within which suits by and against Google may be held (certainly Google gets its fair share of suits from those upset about being indexed--justified or not). Should the Googleplex burn down, the local fire department has been and will continue to be on watch for them. And for those Googlers that don't rollerskate to work, the State of California and the Federal government help to provide safe roads and highways with which to commute over. Should Google go bankrupt, the government provides a fair system of bankruptcy within which the company may survive, to the benefit of the majority of creditors.
Finally, the employees of Google don't have to worry about their status as Immigrants, Jews, Blacks, Men, or Communists interfering substantially with their business dealings. Should they be treated substandardly for these inherant traits (for example while finding a house in the SF market), the governments provide them with a recourse under the law for this irrational discrimination.
Now you're certainly welcome to claim that taxes are too high, that the government is accomplishing their goal too wastefully, or the like. But perhaps the State of California uses the high tax rates as an migratory throttle, to make sure that people planning to make money on a large scale do so outside their state? If California is still enjoying a growing economy and population, despite the high tax rate, perhaps enough people like the system to make it work?
I Browse at +4 Flamebait
Open Source Sysadmin
Dude, they have a BILLION dollars. You could feed a country on the interest on that if you put it in the most worthless savings account possible. I mean, what sane man thinks of a 401k when they have that much money.