We’re all aware how A-list actors such as George Clooney and Brad Pitt usually make about $20 million up front and then 10% of the back-end to appear in a new motion picture. But if a performer really believes in their ability to bring people into theaters, the smart ones take far less, sometimes even zero dollars for a role and instead upgrade their back-end compensation.
That’s the way it’s gone for years, most famously perhaps with Jack Nicholson, who took $6 million instead of his usual $10 million salary to play The Joker in 1989’sBatman and traded the difference for a bigger cut of DVD and merchandising revenues that eventually gave him a $60 million payday. No one begrudges these actors for taking more back-end rewards, and we never judge a new Pitt or Clooney deal based on the past riches they’ve already garnered.
Hollywood’s elite is filled with actors who took massive pay cuts and instead gambled on future earnings. There’s Bruce Willis, who made $120 million from The Sixth Sense, taking a chance on working with a first-time director with an unusual script. Tom Hanks made $70 million from Forest Gump, sacrificing half of his $20 million paycheck in exchange for 10% of the movie’s gross revenues. The list goes on and on.
The way I see it, that same formula should apply to a CEO. Sure, a top executive can draw a salary that pays millions of dollars up front. Another way is to take little, or no compensation up front and plow that money back into the company so it can grow the firm by hiring superstar employees, inventing new products and making smart acquisitions. I’m currently the CEO of my fourth company,
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