If you think Research In Motion's co-CEOs are hurting for money after taking dramatic pay cuts, think again.
RIM chiefs Jim Balsillie and Mike Lazaridis said yesterday that they had asked to change their salary to $1 per year. The salary cut was a clear acknowledgement of the issues facing the company, and an act of contrition amid growing criticism about their ability to run the BlackBerry business.
It's a welcome gesture from two executives who have previously been criticized as in denial about RIM's prospects. But the act isn't as magnanimous as it initially appears, since a bulk of their compensation comes from outside of their salary.
Last year, Balsillie and Lazaridis both earned salaries of $1.2 million, according to a document filed with the Securities and Exchange Commission. But that figure only accounted for 23 percent of their total compensation, which also included restricted stock, compensation from an annual incentive plan, special awards, retirement pension savings, and other items. Their total compensation was $5.1 million each.
In fact, the two are just the latest in a long line of high-profile CEOs that have taken the token $1 salary, only to receive a lot more in other compensation.
Executives ranging from Steve Jobs to Google's Eric Schmidt, Sergey Brin, and Larry Page. and Oracle's Larry Ellison have at one time reduced their annual salaries to $1. Of course, many of them boast vast fortunes, stock compensation, and other special awards to tied them over. Others, including Cisco Systems CEO John Chambers and Nvidia CEO Jen-Hsun Huang, took $1 salaries after their companies hit rough patches.
Of course, given RIM's stock performance and its sliding market share, Lazaridis and Balsillie could take a hit to their total compensation this year. RIM won't disclose the executives' compensation for this fiscal year for another several months.
And going from $1.2 million to $1 isn't an insignificant cut. By relying more on stock compensation, the executives are banking that the company's prospects--and its market value--changes course.
Ultimately, the two embattled executives are hoping the symbolic cut will give them some breathing room from investors who are looking for the company to shake up the leadership team. Some critics have quipped that $1 may still be too much.