Does it make sense to pay your CEO $1 a year?

They're giving up millions to take one for the team. Big Three automaker CEOs Bob Nardelli, Alan Mulally, and Rick Wagoner have pledged to cut their salaries to $1 a year as part of cost-cutting, Congress-pleasing measures at Chrysler, Ford, and GM. But does it actually help a company or have any impact on the bottom line? And can't executives work around it?

To receive a single greenback for a year's work has long been associated with honorable sacrifice for a cause and a nation. During World War I, "dollar-a-year men" played crucial roles, joining government planning efforts and helping the military procure and secure supplies for the country. One such patriot was George Peek, a VP at John Deere. Eventually serving as industries representative on the War Industries Board, he wrote, "[W]hile not seeking additional responsibilities nor public preferment, I deem it my duty to render all possible assistance to the country." It wasn't all toil, though: Many dollar-a-year men remained on their companies' payrolls and returned to them after the war, enriched by their experience and contacts in government. Franklin Roosevelt was able to recruit Marshall Plan visionary William Clayton and GM President Bill Knudsen to serve in key positions during the second world war.

Reaping a dollar a year actually had meaning in government employment because it was illegal to provide the government a service for free. Both John and Robert F. Kennedy were reported to have donated their executive-branch salaries to charity. Like term limits and flag pins, it's become something of a populist trend, with plutocrats (Mitt Romney and Michael Bloomberg) and even people of merely considerable means pledging to take a $1 salary or donate their salaries to charity to shore up their credentials with the electorate. For those who can afford to do it (the highest-earning elected official in the United States is the president, who makes $400,000 and gets to ride in a nice jet but receives no stock options), it's a sacrifice worth a few extra votes. John McCain and Ross Perot pledged to bring, and Bloomberg, 1970s New York Mayor Abraham Beam, and U.N. Secretary General Kofi Annan brought, dollar-a-year men into their administrations to respond to actual or perceived emergencies.

In the corporate world, such thrift is of a more modern, and clouded, vintage. Lee Iacocca was lauded for "working for pennies" a year after he took over Chrysler in the late 1970s. Except, as compensation expert Graef Crystal points out, it didn't quite work out that way. Iacocca did receive a $1 salary for many years, but he was "made whole" with shares at least once, and he continued to receive large stock-option grants, realizing $43 million in gains due to the stock's appreciation from 1978 to 1987. Since then, a number of founder/hero types have had "dollars with benefits" arrangements with their companies. Steve Jobs got millions in options and a company jet after he returned to Apple in 1997; Jerry Yang may have received a George Washington a year for his Yahoo work, but his Yahoo stock portfolio was (until recently) all about the Benjamins.

The ways to make end runs around a dollar-a-year pledge, as Jobs and Yang show, are familiar: options and shares. Tim Bartl of the Center for Executive Compensation points to a rule of thumb for CEOs at industrial companies: They make 15 percent to 20 percent of their compensations in salary, 20 percent to 25 percent in annual incentives, and 50 percent to 60 percent in longer-term incentives. (This is encouraged by a federal tax rule that prevents companies from deducting salaries larger than $1 million from their corporate income taxes.)

Financial firms, which were traditionally partnerships, had much flatter compensation structures, with many dozens or hundreds of partners sharing in the bonus pool, which represents a much larger share of a firm's profit. But cutting there is now harder, precisely because many of these partnerships have become publicly traded companies with heroic CEOs. Meanwhile, a CEO salary cut at a place like GM, which is carrying $62 billion in debt, will have almost no effect on the bottom line.