“World’s wealthiest billionaires?”A quick search on Google and one will find Jeff Bezos’ name in the third place, just after Elon Musk and Mark Zuckerberg. Whether it’s Forbes or Bloomberg, all of them concur that with a whopping wealth of nearly $227 billion, the Amazon founder is the third richest man in the world. Although he has long been associated with immense wealth, strangely, his salary slip doesn’t reflect that at all.
In fact, looking at his salary slip, one might even confuse Bezos with any other common man with a moderate income.Do you know how much Bezos takes away at the end of the year?
A modest salary
For decades, Bezos has maintained a base salary of 80 grand (approximately $81,840) per year, a figure that has remained unchanged since 1998.But why?Why keep a moderate salary despite amazing tonnes of wealth?Turns out, this modest compensation was a strategic decision rather than a financial necessity. Bezos believed that his substantial ownership stake in Amazon, which at times exceeded 10%, provided sufficient incentive to drive the company’s success .
The power of equity
Bezos’ salary might not be ‘up to the mark’ per his worth, but his earnings were not affected by it. While his salary was modest, Bezos’ wealth was primarily derived from his equity in Amazon. As the company’s stock price appreciated, so did the value of his holdings. In 2023, Bezos’ net worth increased by approximately $70 billion, largely due to the rise in Amazon’s stock value. His approach to compensation is a great learning in terms of the significant role that equity ownership can play in wealth accumulation.
Tax implications
Apart from earning from his stake in Amazon, Bezos’ decision to draw a modest salary also had tax advantages. By keeping his income low, he reduced his taxable earnings, which, in some years, allowed him to pay little to no federal income taxes. For instance, in 2007 and 2011, Bezos reportedly paid no federal income taxes, as his reported income was offset by investment losses.
Post-CEO compensation
Bezos, who founded Amazon in the 90s, stayed the CEO of the company till 2021. After stepping down as Amazon’s CEO in 2021, Bezos continued to receive a salary as Executive Chairman of the Board. This compensation remained consistent at $1.7 million annually, a figure that also remained unchanged for several years.
