http://money.cnn.com/2006/03/31/technology/google/index.htm
Google leaders stick with $1 salary
According to the search engine's latest proxy filing, Eric Schmidt, Larry
Page and Sergey Brin each turned down a raise.
By Paul R. La Monica, CNNMoney.com senior writer
March 31, 2006: 4:38 PM EST
NEW YORK (CNNMoney.com) - Google's co-founders and chief executive officer
were offered a raise this year by the company's compensation committee, but
the three turned it down and are sticking with their current annual salary
of $1.
The search engine company made the disclosure in its proxy statement, which
was filed Friday with the Securities and Exchange Commission. CEO Eric
Schmidt and co-founders Larry Page and Sergey Brin first requested that
their salary be cut to $1 in the second quarter of 2004, just before the
company's initial public offering. Prior to that, Schmidt was making
$250,000 a year while Page and Brin each earned a salary of $150,000.
In Friday's filing, Google (Research) said that "due to our continued strong
performance, the leadership by Eric, Sergey and Larry throughout the year,
and below-market cash compensation levels, the Committee determined that an
increase in cash compensation opportunities was merited, and we offered
Eric, Sergey and Larry an increase in salary and bonus for 2006."
The company added that Schmidt, Page and Brin turned the offer down because
"their primary compensation continues to come from returns on their
ownership stakes in Google. As significant stockholders, their personal
wealth is tied directly to sustained stock price appreciation and
performance, which provides direct alignment with stockholder interests."
According to the filing, Schmidt owns about 12.45 million shares of Google,
which are worth about $4.86 billion based on the company's most recent stock
price. Brin owns about 31.6 million Google shares and Page owns a little
more than 32 million shares. So their stakes are each worth more than $12
billion based on current stock prices.
Frank Muto
President/CEO
FSM Marketing Group, Inc
----- Original Message -----
From: "Peter R." <[EMAIL PROTECTED]>
Check with your CPA on that.
The IRS likes to see salary and other activities that represent that your
"company" really is a company and not a tax shelter so that you avoid the
sole proprietor tax schedule.
(It's called piercing the veil -- if you don't have minutes and annual
shareholder meetings and run it like a business, you lose the corporate
shield for tax purposes AND for liability as in civil litigation).
----- Original Message -----
From: "Larry Yunker" <[EMAIL PROTECTED]>
I think you are on the mark here... according to what I picked up through
my Business Planning coursework, the IRS has fairly consistently applied a
reasonableness test to the salary of a CEO who is also a majority
shareholder. But reasonable is a fairly broad term. Zero would not be
reasonable in any case, but $10,000 or more might meet the reasonableness
standard for companies with limited revenues. On the other hand, if your
company is turning $1MM in sales, you better be paying your full time CEO
substantially more than $10,000 because the IRS will see right through
that ploy. In addition, if you try to pay the CEO through an incentive
program (dividends or stock options) in lieu of salary, the IRS will treat
the capital-gains as real income and will tax the CEO at the higher
personal rate. You have to provide a balance of salary and other
non-salary incentives in order to get the maximum tax advantage.
- Larry
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