Jack Dorsey is taking on a big job Twitter, but not a big paycheck.
There are apparently many reasons Twitter’s board decided to name Jack Dorsey as permanent chief executive. He knows and understands the product. He had the support of key investors. And as a co-founder who has been leading the struggling social media service on an interim basis since the summer, he has the “moral authority,” as newly named chief operating officer Adam Bain put it, to make needed changes at the company, which is facing slow user growth and a crowded social media market.
Yet Dorsey has another advantage: The board won’t have to pay him anything new to do the job.
In a regulatory filing, Twitter said “there are currently no plans to provide Mr. Dorsey with direct compensation for his role” asCEO. That means, as when he was interim CEO, Dorsey will not receive a salary, bonus or additional stock compensation. A Twitter spokesperson declined to provide further details.
Of course, he hardly appears to be hurting financially. Forbes has valued his net worth at $2.2 billion, and an August regulatory filing said Dorsey owned 21.9 million shares in thecompany. He also has another day job as the CEO, founder and major shareholder of the mobile payments company Square, which he is expected to take public before year’s end.
If the Twitter board sticks to those plans, Dorsey will join the rarefied ranks of founder-CEOs who are sitting on big enough mountains of stock that they don’t need to be handed more. According to Equilar, the executive compensation research firm, there are just five CEOs in the Standard & Poor’s 500-stock index with $1 or less in compensation, excluding benefits, perks, and pension or other deferred compensation costs.
On that short list are Google’s Larry Page, Whole Foods’ John Mackey, Kinder Morgan’s Richard Kinder and Fossil Group’s Kosta Kartsotis. Facebook’s Mark Zuckerberg also does not get new compensation other than costs related to his personal use of aircraft.
Boards usually make such arrangements partly out of philosophy and partly out of optics, says David Wise, vice president and U.S. market leader of the Hay Group, a management consulting firm. If CEO pay is supposed to align the CEO’s interests with that of shareholders, and the CEO is already sitting on an enormous pile of stock, “almost no amount of compensation that you can award him is going to make a material difference with the ownership stake he already has,” Wise says. “It also sends the message the CEO is playing for the shareholder, and that’s all he’s playing for.”
Of course, this elite club of executives has had other members over the years. The lack of newly awarded compensation marks yet another way Dorsey— who also runs two companies, wears something of a uniform and is coming back to revive the company he helped start— has something in common with the late Steve Jobs, whom he is reported to have idolized. The onetime Apple CEO was paid $1 a year each year between 2004 and 2011, when he stepped down.
Twitter chief executive Jack Dorsey is one of very few CEOs who take no compensation.