How are the $1 salaries that CEOs sometimes take considered legal?
"Part of your first link has this statement that I suspect you are missing: However, Section 13(a)(1) of the FLSA provides an exemption from both   minimum wage and overtime pay for employees employed as bona fide   executive, administrative, professional and outside sales employees. Note that executive is in that list. As for the additional note: To qualify for exemption, employees generally must meet certain tests   regarding their job duties and be paid on a salary basis at not less   than $455 per week. Generally which means, ""in most cases; usually."" is not a universal qualifier and thus exceptions can exist. I'd imagine that restricted stock could be a way around some of the rules as there would be a monetary value there in the case of the stock for companies of a particular size." "Even under the executive exemption, see Exemption for Executive Employees Under the Fair Labor Standards Act (FLSA) Section 13(a)(1) as defined by Regulations, 29 CFR Part 541, it seems that a minimum compensation is required. To qualify for the executive employee exemption, all of the following tests must be met: The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week... etc. There is one other possibility under FLSA Section 13(a)(1), as a ""bona fide exempt executive"". Exemption of Business Owners   Under a special rule for business owners, an employee who owns at least a bona fide 20-percent equity   interest in the enterprise in which employed, regardless of the type   of business organization (e.g., corporation, partnership, or other),   and who is actively engaged in its management, is considered a bona   fide exempt executive." "Taxable fringe benefits are included in taxable wages for the purpose of FLSA. So when those executives get to use company cars or company jets that value is ""wage"" even if it isn't salary."
I'll agree to that. They are definitely manipulations that end up with unintended consequences.   Even the idea of tying stock to the CEO's salary was intended to make the CEO think long term, but what happened is that they figured out how to game the system. Which is unfortunate, especially since the employees end up taking the brunt of that. Need a stock boost? Lay off some people, buy back some stock or announce something. The CEO of a public company can, and often does, buy (and sell) the stock of his company. In fact, frequently the stock of the company is part of the compensation for the CEO. What makes this legal and fair is that the CEO files with the SEC an announcement before he buys (or sells) the stock. These announcements allow us 'in the dark' people enough warning ahead of time.  See, for example, the trades of UTX stock by their public officers. As for trading on information about other companies, if I am not mistaken... that is why Martha Stewart wound up in prison. So, yeah, it does happen. I hope it is caught more often than not.  On a related note, have you seen the movie 'Wall Street' with Charlie Sheen and Michael Douglas? This is tax fraud, plain and simple. I recently wrote an article The Step Transaction Doctrine, in which I explain that a series of events may each be legal, but aggregate to one transaction and the individual steps are ignored.  In this case, it goes beyond that, by accepting $5/mo you are already outside the tax code. As littleadv noted, you can't work for a legitimate business for free and not expect to have some kind of issue. The $14K/yr gift isn't a bona fide gift, but ties to that work. He said base salary. Most executive compensation is bonuses, awards, and long term incentives that vastly outweigh the actual cash they receive. Just check out a large company's proxy statement. Walmart's CEO received less than $3 million in cash last year. I have no idea where this lie started and why it is perpetuated. A CEOs only fiduciary duty is to maintain shareholder value. Not increase it maintain it. If the stock price remains at $100 for 20 years congrats it’s been maintained and you’ve fulfilled your fiduciary duty I'm guessing you're talking about options given to employees. The company can issue stock options at whatever strike price it wants. The difference between the strike price and the actual market value is considered income to the employee. You can get the options at $0 strike just as well (although companies generally just give RSUs instead in this case). It is totally legal but it just has to be reported like income. Granted the IRS will probably not catch it. I work for a large company I get little gift cards all the time and they add the dollar value as income for taxes on my paycheck. It is a little annoying because I think it is kind of shit that a dollar value of a gift card is treated as the same value as real money, but they are amazon gift cards so better than cash to me. "The crazy thing about this is that $30 million in annual salary and compensation really isn't the end of the story for rich guys.  I worked for a REIT a few years back and the guy that founded that REIT made a few million in salary a year.  I thought the number seemed a bit low for his lifestyle.  He had many properties in the US for his own personal use (around 6-8 BIG homes).  He also had a garage that was insane.  He had over 25 very expensive cars.  My co-workers would say ""Nick is airing out his garage"" when he drove one to work every day for a month without driving the same vehicle twice in one month.  It turns out he owned 30 million shares of stock that paid him $1.00 per share per year.  So while his annual compensation was ""only"" a few million per year, his dividend income was many, many, times that.  Think about that next time you see a CEO's annual income and you think that it really isn't as much as you expect." "If we take only the title of the question ""can the CEO short the stock"": It was probably different before Enron, but nowadays a CEO can only make planned trades, that is trades that are registered a very long time before, and that cannot be avoided once registered. So the CEO can say ""I sell 100,000 shares in exactly six months time"". Then in six months time, the CEO can and must sell the shares. Anything else will get him into trouble with the SEC quite automatically. I don't know if shorting a stock or buying options can be done that way at all. So it's possible only in the sense of ""it's possible, but you'll be in deep trouble"".  Selling shares or exercising share options may indicate that the company's business is in trouble. If the sale makes that impression and everyone else starts selling because the CEO sold his shares, then the CEO may be in trouble with the board of directors. Such a sale would be totally legal (if announced long time ahead), but just a bad move if it makes the company look bad. Shorting sales is much worse in that respect. If the CEO wants to buy a new car, he may have to sell some shares (there are people paid almost only in share options), no matter where the share price is going. But shorting shares means that you most definitely think the share price is going to drop. You're betting your money on it. That would tend to get a CEO fired, even if it was legal." This is the correct answer and is a concrete way to start to work on be legitimate problem of the income gap between the 1% and the rest of the population.  Ive tried, but never been able to justify the compensation earned by the fortune 100 CEOs. There is a funny story about that.  If you were visiting Apple and Jobs was taking you to lunch in the cafe - he would insist on paying.  Employees, get to checkout and have their badge scanned and the cost of the food is deducted from their paycheck.  So why did Steve always insist on treating for lunch?  He was enjoying all he (and guests) could eat for $1 a year. "tl;dr:  Prosecutors probably thing they can't meet the ""reasonable doubt"" standard, and the deck is heavily stacked against lawsuits.  The whole running the company into the ground part is legal.  It's stupid, but no different than any bad boss that pits employees against each other.  Just on a much grander scale.  The real estate thing is extremely shady.  However, when you're the boss of a company, It's not considered theft to do business with another company you own.  The truth is Sears is drowning in debt.  The CEO offered an easy out.  They sell the property, and only pay reduced rent.  It also means closing stores is easier, and Sears is on the decline.  So, on its own, it's shady, but not the worst way of getting quick cash.  The fact that the CEO is responsible for that decline is what pushes things into potential legal trouble.  It's essentially a complicated form of theft.  One where if Sears goes bankrupt too early (before 2020 or so), his real estate business can't handle it and burns.  However, these sorts of executive theft are almost never prosecuted.  The best chance would be a shareholder lawsuit, but it would have to be against the entire board for supporting him.  Then you run into the issue that, while the board is ""elected"", the laws governing it allow for tricks that make the Russian election look sterling in comparison.\*  Basically, if a CEO is backed up by the board, and not doing something blatantly illegal, they can probably get away with it.  Board elections tend to be rigged to the point that having a member that cares about the company, and all the minor shareholders is laughable.  \* In addition to how the candidates are chosen, votes are cast, etc..., etc... many companies have several types of shares.  Some of which have no voting power, and some of which count for many times the vote of a normal share." "Nope, its not legal. Easy to explain: If you know something that isn't public known (""inside"") it's called insider trading. Hard to prove (impossible), but still illegal. To clarify: If the CEO says it AND its known in public its not illegal. In any case the CEO could face consequences (at least from his company)." Indirect exchange (the common units of which are called 'money') is not debt (though the commodity of indirect exchange may be debt). Physical gold is not debt (it is mined, not conjured into existence from someone's promise of future goods). Gold-backed paper currency is gold debt.  Indirect exchange is an extension of barter, not a replacement. The advantage of indirect exchange over direct exchange is that it solves the coincident of wants problem. (Alice may want a telescope, but Charlie doesn't want 500 apples for it. Alice finds out that Charlie would trade the telescope for 1 unit of gold. Alice then finds Bob who is willing to trade 1 unit of gold for 500 apples. Alice then trades with Bob and then trades with Charlie to get what she wants.) As you have income from Business / Profession, you would need to use form ITR4S