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The Story of the CEO Paying Everyone $70k Gets Complicated

Posted by samzenpus on from the not-so-fast dept.

ranton writes: Dan Price, CEO of Gravity Payments, made news last April when he raised all employee salaries to at least $70,000. He claimed his motive was based on research that shows increased wages increase happiness up to about $75k per year. But according to a recent Bloomberg article this may have been a smoke screen. Karen Weise found Dan Price has been fighting with his co-founder Lucas Price over Dan's salary for years, and that his co-founder served him with a lawsuit weeks before the pay raises were announced. Apparently Dan had been paying himself nearly three times the salary of CEO's of similar sized companies in his industry, over the strong objection of his co-founder. The lawsuit was not officially filed until after the announcement, making it originally look like the pay rise caused the lawsuit. Now it appears to be the opposite. Since the lawsuit is trying to force the CEO to buy out his co-founder based on the CEO's prior greed, lowering the short term profitability of the company while boosting his positive PR seems to be a likely motive for the pay hike.

18 of 233 comments (clear)

  1. I liked it more before.... by cfalcon · · Score: 5, Insightful

    I liked it better when he was an idealistic hippie. The idea that one moronic but well meaning CEO was doing bullshit to help people, even if it had long term ruinous consequences, was pleasant.

    Now it's just another greedy 0.1%er nomming up cash and playing a good game of sociopathic prisoner's dilemma. Boring. That's so ubiquitous in corporations that it's just a common stereotype in all the netflixes and youtubes. Hell, prolly the redtubes too.

    1. Re:I liked it more before.... by Jack+Griffin · · Score: 5, Insightful

      Now it's just another greedy 0.1%er nomming up cash and playing a good game of sociopathic prisoner's dilemma. Boring.

      You say that as if 1%'ers somehow behave differently from the other 99%? *Everyone* acts in their self-interest, you act surprised that having money would somehow change the laws of nature?

    2. Re:I liked it more before.... by MyAlternateID · · Score: 2, Insightful

      Now it's just another greedy 0.1%er nomming up cash and playing a good game of sociopathic prisoner's dilemma. Boring.

      You say that as if 1%'ers somehow behave differently from the other 99%? *Everyone* acts in their self-interest, you act surprised that having money would somehow change the laws of nature?

      I don't know about that. People vote against their own self-interest all the time, both at voting booths and with their money in the marketplace. All it takes to get them to do that is a little propaganda (or PR, or whatever you like to call it - I prefer the old term "manufactured consent" because it's more honest). It works all too well, even in the case of advertising in which the bias of the message is obvious.

    3. Re:I liked it more before.... by mattwarden · · Score: 3, Insightful

      I'm always amazed how disconnected observers can somehow determine when someone is voting or buying against their interest. Your crystal ball is much more powerful than mine. Or perhaps you don't understand that economic value is personal and subjective.

    4. Re:I liked it more before.... by sg_oneill · · Score: 2, Insightful

      You say that as if 1%'ers somehow behave differently from the other 99%? *Everyone* acts in their self-interest, you act surprised that having money would somehow change the laws of nature?

      You are aware that the "all actions are self interested" thing is pretty much a nonsense that economics stubbornly maintains over the objections of psychology and philosophy.

      Philosophers point out that all formulations of the statement are more or less tautological, psychologists point out that the claim simply doesnt line up with what we know about how the brain works.

      But half a century of dubious free market economic theory falls into a heap if the axiom is abandoned, so its repeated as an article of faith.

      But its wrong.

      --
      Excuse the Unicode crap in my posts. That's an apostrophe, and slashdot is busted.
    5. Re:I liked it more before.... by drinkypoo · · Score: 4, Insightful

      You are aware that the "all actions are self interested" thing is pretty much a nonsense that economics stubbornly maintains over the objections of psychology and philosophy.

      [citation needed]

      By the way, you did notice that many of the studies upon which psychology is based couldn't be replicated? It's only barely a science, while philosophy is emphatically not a science. But you want to use them to make declarative statements. Good luck!

      psychologists point out that the claim simply doesnt line up with what we know about how the brain works.

      What we know about how psychologists work is that psychology is at least half bullshit, and I don't ask psychologists how the brain works. They don't get far enough into the chemistry to make useful statements. They're stuck at another level of abstraction.

      Of course everything is about self-interest. If our upbringing is "normal" because we are surrounded by "good" people who are smart enough to recognize that you should do good things for people who do good things for you and actually do so, then we learn to do good things for people in the hope that they will do good things for us. Some people don't have that. They turn out to be shitheels, or anonymous cowards.

      --
      "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
    6. Re:I liked it more before.... by drinkypoo · · Score: 3, Insightful

      psychologists point out that the claim simply doesnt line up with what we know about how the brain works. Most people will balance self-interest with the interests of the people that they perceive as their tribal group (which, for some people, can be very large).

      It takes a special kind of obstinacy and disingenuousness to fail to understand that this is working in one's own self-interest, especially when you're limiting it specifically to their tribal group. If that's the argument that psychologists are working on, then they're a bunch of morons. I hope the argument is more nuanced than you're making it out to be, because of course supporting your tribal group is acting in your own best interest. Nothing could be more obvious! Even sports fans get [misplaced] feelings of belonging, so they think that supporting the team is supporting themselves.

      Why are you willfully refusing to think? Just because you want to believe that people basically inherently behave the way you want them to? The evidence runs the other way.

      There is a reward loop for doing nice things to people. It's self-reinforcing, so we should not be surprised. The more surprising reward loop is making people angry. It turns out that sociopaths get a rise out of making people make a mad face. Just seeing that they made them mad makes them happy. A lot of people out there learned the wrong lessons. We may well naturally tend towards helping one another, but it's clearly not the dominant force. If it were, the world would look very different. How many of us don't even know our neighbors?

      --
      "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
  2. Re:Gets worse near the end of the article by ArchieBunker · · Score: 4, Insightful

    Who watches those TED talks? Most are boring as hell with people spouting off about ideas that are unrealistic.

    --
    Only the State obtains its revenue by coercion. - Murray Rothbard
  3. Or... by joocemann · · Score: 4, Insightful

    ....maybe there are two separate things going on here. One is Dan's pay, and the other is how much they're paying everyone else. How is it that they're conflating the two issues so that one seems like a smoke screen for the other? Is there even a rational connection between the two other than being about pay for people within the company?

    Is it possible that Dan wants to get paid a lot, but also wants everyone else to get paid well? Clearly the motivations to pay everyone else well are quite different from the motivations to pay himself lots of money. I think it's more reasonable to consider these as two separate things.

    1. Re:Or... by Crashmarik · · Score: 5, Insightful

      The motivation is that Dan doesn't want the company to show a profit so his brother's share is worthless.

    2. Re:Or... by roninmagus · · Score: 5, Insightful

      This. Looks pretty cut and dry to me. I love how everyone gushed all over it when it was announced. Made no sense to me that a business owner would make a decision like that out of the goodness of his heart. I know. I sound like a Scrooge.

      But that's how it is. Start your own business so you can be a shot-caller.

    3. Re:Or... by Thunderf00t · · Score: 2, Insightful

      As has been noted elsewhere, the plans for the wage increase predate the lawsuit by a wide margin (the original wage discussion goes back to 2010), and short-term profitability has actually increased substantially since the wage increase. Also, it seems quite unlikely that a CEO could just raise wages in the time-frame necessary to act as the smokescreen suggested in the article.

      I'm not saying that Dan Price's motives are squeaky clean, but sometimes things that look pretty cut and dry really aren't... unless, of course, you decide that your preferred narrative is more important than the details.

      --
      We will never be the change to the weather and the sea
    4. Re:Or... by Crashmarik · · Score: 5, Insightful

      Predate the lawsuit, not the dispute.

      Now who is clinging to a narrative ?

  4. Re:Gets worse near the end of the article by Anonymous Coward · · Score: 4, Insightful

    Not saying it didn't happen, but is there a police report, or any evidence that what she says happened did happen? If this kind of stuff happens it needs to have the police involved immediately. Bringing something up years later after your former husband is suddenly famous comes off as...well...it raises a question in the minds of people, whether fair or not, of an outside motive.

  5. You left out the waterboarding by Nova+Express · · Score: 4, Insightful

    Later in the talk, Colón recalled once locking herself in a car, “afraid he was going to body-slam me into the ground again or waterboard me in our upstairs bathroom like he had done before.”

    Of course, take everything in a divorce filing with several grains of salt...

    --
    Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)

    http://www.lawrenceperson.com/

  6. Re:Gets worse near the end of the article by Anonymous Coward · · Score: 0, Insightful

    Being restrained by anyone and then being punched is reason enough to hold a grudge for a lifetime. Unless they publicly admit to it and apologize. Which I haven't heard of happening.

  7. Re:Gets worse near the end of the article by Thunderf00t · · Score: 5, Insightful

    Who knows if Dan is a wife-beater or not? While he could well be the contemptible person that his wife claims, she could also be trying to ruin the guy now 9 years later (maybe she's dissatisfied with some aspect of their split). That's the problem with he-said she-said crap flinging: anyone can say anything at basically any time. Unless there's some corroborating evidence, I'll treat her story as exactly that: a story.

    --
    We will never be the change to the weather and the sea
  8. Re:Profits soar since pay hike, so by Anonymous Coward · · Score: 5, Insightful

    NO short term profitability has NOT doubled. rate of Revenue growth has doubled. That is not profitability. You can double the rate of revenue growth while at the same time double the amount you are losing. the article you linked to does not mention profitability and in fact says he invested another 3 million into the business. a finance company rolling in profit does not need additional cash injections and large pay cuts for the CEO.