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Seattle CEO Cuts $1 Million Salary To $70K, Raises Employee Salaries
First time accepted submitter fluffernutter writes Dan Price started his company, Gravity Payments, out of university when he was 19. Now he is cutting his $1 million salary to $70,000 and promising to raise all his employees' salaries. Dan is quoted as saying he made the move because "I think this is just what everyone deserves."Good business practice? Silly boosterism? Enlightened self-interest?
I've seen this headline about 5 times in the last 24 hours, on a variety of media. It's certainly good for advertising, if nothing else.
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Decent *and* sensible.
He might draw a much smaller salary - but as he notes, a $1M salary had low marginal value for him.
What he just did was remove all money worries from his staff. Now all their focus can go on increasing the value of his business.
Good for them, good for him. Good morals, and good sense.
Good business practice? Silly boosterism? Enlightened self-interest?
Why not all of the above? He's generating buzz for his company, one which I've never heard of before. His employees will probably be happier, and he's probably getting stock options or something else we don't know about here, so that fits both the good business practice AND enlightened self-interest. It could turn out to be "silly boosterism" if it doesn't end up having any of those effects, but you won't know that immediately...
Taking guns away from the 99% gives the 1% 100% of the power.
Giving up 930K to go viral and generate a ton of good will toward you and your company seems like an incredibly good deal.
You are obviously trolling but.... Capitalism allows business owners and leaders to CHOOSE to make decisions like this. Socialism forces them to do it. Liberals don't really understand the importance of this distinction.
Some things need to be said...
If he's pulling down $5 million a year from company stock dividends, is giving up a $1 million salary that big a deal?
Yes, when it means the minimum wage of his employees jumps from $34,000 to $70,000.
Capitalism allows business owners and leaders to CHOOSE to make decisions like this.
Count of business owners making such a decision under capitalism: 1
Socialism forces them to do it. Liberals don't really understand the importance of this distinction.
Oh, we understand perfectly.
What he just did was remove all money worries from his staff.
Not necessarily. When people earn more money, they tend to spend more less efficiently or for things they want more than need. If they have poor discipline, now they are eligible for more credit and can rack up bigger debts faster.
Often people spend more money than they should, Or they have a "spending disorder", such as Shopping Addiction OR Binge + Buyer's Remorse, and it ultimately results in money worries.
In other words: money worries are not exclusively caused by low salaries. Money worries can be caused by insufficient education/poor resource management, and psychological problems as well.
Even if that is true and he still makes boatloads of money, raising the minimum pay of everybody in the company to $70k is still a very generous thing to have done and should still laudable.
This is assuming they don't try to weasel out of the spirit of it (e.g. only full-time employees and they only hire contractors and part-time workers afterwards).
If he's pulling down $5 million a year from company stock dividends, is giving up a $1 million salary that big a deal?
I think these kinds of statements are missing the point.
The real story here is: hey, you can still make an ass-ton of money without leaving your employees as slaves!! Everyone can win and grow together, rather than a subset at the expense of the majority. (and happy employees produce more, willing to work more, etc., so the company and therefore CEO benefit even more -- it's a positive cycle).
If it's not a big deal to lose some salary because it will be made up for in investment income/dividends, then why don't more CEOs do this? I hope this guy starts a movement; even if his intentions were not entirely altruistic, it is still a good thing.
Forget about the class warfare, OK? Even Bruce Springsteen would agree that as long as everyone is winning, it shouldn't matter if someone is winning more. There are few places in the USA where $70K/year is not a good salary. I doubt those high-fiving employees who just had their salaries doubled think it's a "publicity stunt".
Singlehandedly, he returned $930,000 to the bottom line of his company. Most of us can't make such a claim. But that only accounts for boosting about 25 people who were making $34K to $70K, so unless his company is quite small, I'm sure other strategies were employed. We'll see how effective those strategies are over the coming years. That will tell us if he's just a good guy, or a great CEO.
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I'd rather see someone selfishly improve the lives of others than see somebody wreak havoc in the name of good.
In other words, the tax code is rigged to punish the working class.
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Yeah, don't give people money, they will just misuse it...
OFFS!
Never answer an anonymous letter. - Yogi Berra
So we can both agree that this is the exception, rather than the rule. CEOs and shareholders will pretty-much NEVER allow this, unless forced.
Now, back to the salt mines.
Why can't all fpga/microcontroller manufacturers just release free optimizing compilers???
Choice is overrated. Most people would choose not to pay taxes, but are reliant on them being paid by someone.
const int one = 65536; (Silvermoon, Texture.cs)
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I prefer it when leadership gets paid in company stock.
That's exactly why most companies' leadership only thinks ahead until the next fiscal quarter end.
...gis sdrawkcab (usually not responding to ACs; don't bother posting as AC)
This is exactly what's wrong with America. The majority is convinced convinced that our economy is broken because people aren't working hard enough. I'm convinced of the exact opposite. The reason the economy isn't working right is because people are working too hard in exchange for too little. Furthermore, we could be more productive, and more prosperous, by working more cooperatively and less competitively.
Forget about the class warfare, OK? Even Bruce Springsteen would agree that as long as everyone is winning, it shouldn't matter if someone is winning more.
Everyone except the most radical parts of the left would likely agree with that, the problem is when everyone stops winning it becomes a lot less palatable. In the US, that occurred in the mid-1970s so even the slowest among us have figured out that something is wrong by now.
Could not disagree more. With a newborn, child daycare will cost me $1515 per month. An increase in my salary will help me be in the office 5 days a week vs. working from home, pretending to work while tending to the newborn. Being able to afford child care will be a huge boost in productivity for the company. A very smart move on his part.
What he just did was remove all money worries from his staff.
Not necessarily. When people earn more money, they tend to spend more less efficiently or for things they want more than need. If they have poor discipline, now they are eligible for more credit and can rack up bigger debts faster.
Often people spend more money than they should, Or they have a "spending disorder", such as Shopping Addiction OR Binge + Buyer's Remorse, and it ultimately results in money worries.
In other words: money worries are not exclusively caused by low salaries. Money worries can be caused by insufficient education/poor resource management, and psychological problems as well.
Our modern economy is based on this dynamic. We would not be able to sustain economic growth if people just bought what they need and maybe a little extra. Because of the way our monetary and economic systems are set up, they require constant growth or the music stops.
I would also add that people are constantly inundated with advertizing. That advertizing often seeks to make the subject feel inadequate in some way and offers the solution by way of the product being advertized. People have studied how to make people react in a certain way and what triggers their responses. Basically it is those people's job to figure out what makes you tick and use that knowledge to manipulate you. So I can't be too hard on people who make seemingly foolish decisions with their money. We are so immersed in advertizing and PR it's hard to even see it happening. The psychological pressure is immense and is designed to be hard to resist.
"What the American public doesn't know is what makes them the American public." -Ray Zalinsky (Tommy Boy)
>Forget about the class warfare, OK? Even Bruce Springsteen would agree that as long as everyone is winning, it shouldn't matter if someone is winning more.
Sure, *IF* everyone were winning. But they're not. Real wages have been falling for the lower 90% of the population for ~50 years, even while the GDP has been climbing rapidly. And even most of the top 10% are substantially worse off than they would be if wealth disparity weren't climbing so rapidly - only the 1% are actually better off than they would be if not for the aggressive class warfare being waged by the uppermost echelons of the 1%. Double the salary of someone making $35k and they're STILL losing, just not as badly.
That said, in this particular instance yeah, the CEO is to be applauded - he can't change the game single-handedly, but he can and has improved the lives of many of his employees,
--- Most topics have many sides worth arguing, allow me to take one opposite you.
Well, that depends... has he also cut any bonuses he may get? How much does he already have stashed away? Is the company public, or going public? If so, how much stock does he own? Is he contemplating an entry into politics and is doing it to put a nice coat of polish on his populism creds?
By the way: For the longest time, Steve Jobs had an annual salary of $1.00 as CEO of Apple. Of course, his stock holdings in the company gave him more money annually than the GDP of many small countries, but...
Anyrate, while this is admirable and such, the sceptic in me wants to know more abut how he can afford to do that (because $70k/yr in Seattle ain't really all that much money), and why.
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But it's fine for the 0.01% to rewrite the laws to allow themselves to seize an ever-greater portion of the national profits? They thank you for your loyalty I'm sure - or they would, if they gave a fuck about the proletariat.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
According to other articles, it will cost them an average of $19k for 30 employees, so $570k. And not well publicized is he is going to spread it over 3 years. So $200k year one, $400k year 2, and so on. The $930k pay cut is immediate. The company is completely owned by the two brothers, and makes $2M in profits per year, which presumably they reinvest or take out in bonuses. The absolute WORST way to get money out of your own company is salary. I would be shocked if the tax advantages of changing disbursement methods dont outweigh the $190k first year costs, while raising profitability on paper, and making you the darling of the media and the White House (they're cozy with Obama already). If their goal was to sell the company, this would be a pretty good way to pump up the profit margin and P/E ratio before cashing out, and a little media blitz helps too.
Good for them! Gaming the system to make a buck and help their employees at the same time. But this is not sheer altruism at work.
Indeed. Perhaps they could be paid primarily in stock options vesting 10 years after they're issued.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
Your argument boils down to:
"if you get paid more than you're worth, you might someday find yourself in a situation where that well-paying job goes away, and you'll need to re-adjust your standard of living back down to where you 'should' be. Wouldn't it be better for you to simply keep making less money and remain at that lower standard of living in the first place? You'd avoid all kinds of uncertainty and potential upheaval!"
Compensation is whatever your employer wants to give you. If you find what this guy is doing to be grating and wrong, that says a lot more about you than it does him.
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Well, that depends... has he also cut any bonuses he may get? How much does he already have stashed away? Is the company public, or going public? If so, how much stock does he own? Is he contemplating an entry into politics and is doing it to put a nice coat of polish on his populism creds?
By the way: For the longest time, Steve Jobs had an annual salary of $1.00 as CEO of Apple. Of course, his stock holdings in the company gave him more money annually than the GDP of many small countries, but...
Anyrate, while this is admirable and such, the sceptic in me wants to know more abut how he can afford to do that (because $70k/yr in Seattle ain't really all that much money), and why.
$70,000 not being all that much money depends on how much you expect is "all that much". I was supporting a family in Seattle with a single income of $70,000 before taxes, with want of nothing.
But, that's not what prompted me to reply.He reduced his salary to 7% of its prior amount because he felt he had enough and wanted his company to better invest that money in its other employees. He could have six billion in cash sitting in accounts all over the world, and it wouldn't change the sense of his action.
Capitalism allows business owners and leaders to CHOOSE to make decisions like this. Socialism forces them to do it.
Every civilized country engages in socialism. The only difference is in the degree to which they do it. A society which does not will rapidly fall apart. If you have a job it is because a lot of other people worked very hard to make it possible - even if you work for yourself. We require people pay taxes and minimum wages and other things because it benefits us all. While you can take it too far, we're certainly in no danger of that here in the US.
Liberals don't really understand the importance of this distinction.
Liberals understand that the real world isn't a place where we can afford to pretend we don't depend on each other. Share a little and everyone benefits. It is possible to both share too little and share too much. Personally I think the sharing too little is the worse of the two options.
The owner decided to do this of his own free will, regardless of what his motive was. That's the point of freedom. You're allowed to choose.
And most will choose not to of their own free will. That's the problem. If we made taxes optional, how many people do you think would pay? If we eliminated work safety rules do you think best practices would be followed? Real freedom isn't the absence of rules and obligations because society cannot function without them. Real freedom is being able to have a meaningful say in what those rules and obligations are and should be. Real freedom isn't depending on the beneficence of a single CEO deciding one day to be a nice guy.
Under socialism, your choices are far more limited. As with most forms of collectivism, either things are mandatory or they're prohibited.
Tell you what. Take a trip to Europe sometime. The EU is by many measures the largest economy in the world. The standard of living in most of the EU is quite high compared to much of the rest of the world. Most governments in the EU have what is generally acknowledged to be a somewhat socialist ideology - certainly in comparison to the USA. And yet they have good health care, good GDP per-capita, world class businesses and manufacturing and art and sport, and are among the most successful societies on the globe politically, economically, militarily and socially. All while "socializing" certain aspects of their society and what do you know, it works if you don't take it to the extreme of communism.
Here's the point of all that. We ALL depend on each other. You can argue about how much sharing is a good thing but you cannot argue that all sharing can be optional. It simply will not work. Some folks simply are more willing to acknowledge this fact than others. You can argue about how much sharing is a net benefit to society but the argument Socialism = Bad is just stupid. EVERY society has some amount of socialism to it and it cannot be otherwise.
Clearly a comment from someone who has never been without money. FYI it costs a lot of money to start your own business, and those who live paycheck to paycheck are very much short on options when quitting means they are homeless. Money gives you options. Lower income people have less options because they have less money, and the reason they have less money is because the money is being scalped by higher income people who have the options, granted by wealth, to do something like influence an election or lobby for a lower minimum wage.
also:
The fact that some people have more choices doesn't mean that you have less
Did you actually read this statement? Do you realize that it contradicts itself or are you just that blinded by you unsubstantiated ideology that you cannot see reason?
"There are lies, there are damn lies, and there are statistics"
But it's fine for the 0.01% to rewrite the laws to allow themselves to seize an ever-greater portion of the national profits?
So basically, what you're saying is "The rich and powerful are corrupting the government. The only solution is more government!"
Taking guns away from the 99% gives the 1% 100% of the power.
No, the argument is that people will do what people do, which is increase their expenses as their income increases.
When they have to cut back, they won't, and instead end up on the six o'clock news whining that it's so unfair and that they should get to keep the house they can no longer afford. We've seen this before.
We're both saying the same thing. You trust the wisdom of the market over your own judgement. Your core argument is that you should stay where the market says you belong, because you really can't be trusted to know how to handle more than what the market says you deserve.
Obliteracy: Words with explosions