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?

Comments

Decent

[Andy Smith]

Just seems like a decent thing to do.

Re:Decent

[PRMan]

If he is married, $70,000 puts him in a federal tax bracket where his long-term capital gains rate becomes 0%. He is doing this to pay 0% taxes on his stock that he cashes out and any other investments he has.

How much is his investment in the company making?

[ZorinLynx]

A lot of CEOs (a good example was Steve Jobs) will take token small salaries because most of their income is from their ownership in the company.

If he's pulling down $5 million a year from company stock dividends, is giving up a $1 million salary that big a deal?

So what?

[johnnys]

He surely owns a large chunk of the company: Why take a huge salary when you can motivate your employees to work harder and make the company worth more? That is a faster way to get rich than just paying yourself a salary.

He gets rich faster, and the employees are happier. It's win-win. Just don't pretend it's about "justice" and not simple self-interest.

Meh.

Challenge to other CEOs

[t'mbert]

CEO salaries are getting ludicrous, and while his $1M is not that outrageous compared to others, it still could be translated into about 10 FTEs. Setting a minimum wage for his staff, and making sure they can all survive on what they make at their job, will translate in staff dedication that will be hard to put a price on.

I think he's also thrown the gauntlet down to other CEOs, saying: "Dare you to join me!"

Re:How much is his investment in the company makin

[netsavior]

They have taken token salaries so that they do not have to pay income tax, NOT because they are heroes. "Compensated in stock" is another word for "Tax evasion"

It isn't cute, it is CEOs taking advantage of YOU directly, and looking like heroes when they do it.

Long View

[sycodon]

So here you are, a clerk or some other lower on the totem pole individual who is now making $70k. You buy a house, maybe a used car, or the reverse, either way, you increase you expenses because you can. Even frugal people would do it, it's human nature.

So now it's a few years later. The company goes under, you get laid off and you go around looking for a job that pays $70k for doing what you were doing.

None to be had.

Compensation has been commensurate to your skills for hundreds of years. It may suck for the unskilled, but that's what works. For the employer and the employee. You increase your skills, you increase your pay. Do more, get paid more. When everyone makes the same or nearly the same for vastly different levels of skill and effort, then you are headed for trouble in the long term. Just look up the Jamestown Colony and how it worked out for them.