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The Story of the CEO Paying Everyone $70k Gets Complicated
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.
"Price's life may get more complicated the week of Dec. 7, when TEDx plans to post online a public talk by his former wife, who changed her last name to Colon. She spoke on Oct. 28 at the University of Kentucky about the power of writing to overcome trauma. Colon stood on stage wearing cerulean blue and, without naming Price, read from a journal entry she says she wrote in May 2006 about her then-husband. "He got mad at me for ignoring him and grabbed me and shook me again," she read. "He also threw me to the ground and got on top of me. He started punching me in the stomach and slapped me across the face. I was shaking so bad."
"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."
Except that short-term profitability has DOUBLED since wages increases commenced (source). Did his plan then backfire?
Never attribute to altruism that which is adequately explained by self interest.
No facts. Rampant speculation/innuendo/suspicion. Why do I read this page again?
In which case, it's backfired horribly, since all the coverage I've seen has said that it's actually been very good for business.
Yes, but a lot of people get some kind of strange visceral satisfaction from seeing a plan backfire, even when it has no effect on their own lives. That tendency is especially noticable when the person implementing the plan is famous, wealthy, powerful, or generally successful in some way.
Thus, several posters seem to have a vested emotional interest in a cynical motivation for this particular plan. Apparently their worldview would take a swift kick to the gonads if they were wrong about this one.
Personally I'd be delighted to know that something somewhere was done for a good reason, and that this good reason was also the real reason. I'm not remotely naive enough to assume that, but if it should turn out to be true, it would be good news all the same.