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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."
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.
....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.
"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?
Unofficially filing for something is called an Iowa and New Hampshire book tour.
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/
One of the few things that will get an executive in trouble personally (other than typical crimes) is if they personally take money or otherwise gain at the expense of shareholders. A company president is allowed to pay everyone far too much if they choose to. They can give the company money away. The one thing they can't do is take the money for themselves. That's what he's being sued for, taking his shareholders' money for himself. So what defense can he possibly have for paying himself way too much ...
The company pays EVERYONE too much, which is perfectly allowable. That's pretty much the one and only way he can get out of the lawsuit for using company money to pay himself four times too much; he simply says "it's company policy to pay -everyone- a very high salary". That's a perfectly lawful policy, and it would be a good defense except the other lawyer will point out that he paid himself way too much well BEFORE that was company policy. As soon as the lawsuit is over he goes back to paying whatever he wants to pay.
It has a bonus effect if he's ordered to buy his other shareholder out, paying the other shareholder 50% of the company's fair value, if by spending the company's money it temporarily reduces that value.
No facts. Rampant speculation/innuendo/suspicion. Why do I read this page again?
Drama by Dice, served hot. Next up, women in tech!
Doesn't matter if he had idiotic reasons for doing it. When he raised wages employees were still happier and profit still increased. And that raises big questions about the sensibility of many companies paying low to increase profit. It generally just makes their employees, and their clients who deal with their disgruntled employees, hate them.
Whatever, I'd have loved to have worked in his company
Your excellent example of how every company should be run fulfills its promise.
...if the lawsuit was dismissed/settled/whatever he'd be unable to un-raise all those salaries...
The lawsuit reads to me as "Uh, bro, all those raises cut my profit sharing - you're a dick..."
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We would have to ask her other boyfriends/partners. Maybe she's just one of those women who don't listen!
lucm, indeed.
Are you aware that there are like 5 other women who came forward to also accuse him of rape?
I don't know if he did rape all those women or if he's just such a big asshole that so many of them "bare false witness" to hurt him, either case fuck him.
lucm, indeed.
These kinds of people need to be sued for slander, because it devalues the plight of women who were actually abused.
Gamingmuseum.com: Give your 3D accelerator a rest.
If you'd like to learn more about it, the term to google is "Fiduciary Duty". The officers are repreerntatives of the shareholders and legally obligated to act on behalf of the shareholders, not their own selfish interest (when the two conflict). Salaries of officers are typically set by the board, not by the officers themselves.
A clear example which can get an officer sent to prison is if they simply empty out the corporate bank account (which is the shareholders money) and head overseas, where the spend the money on themselves, as if it were their money.
You may see someone write that "corporations are legally required to put profit above all else." That misunderstanding stems from this rule that the officers and board members must put the well-being of shareholders above THEIR OWN interests. Otherwise, the "business judgement rule" applies. The rule says officers can do anything that they believe will be in the best interest of the business, including charitable gifts, promoting the well-being of employees, etc - and can't be held liable for being wrong. Under the business judgement rule, being wrong is okay, that happens; being selfish, benefiting yourself at company expense is illegal (other than board-approved compensation).
In very small mom-and-pop companies, sometimes the officers and the board are the same people , but that gets tricky because they're still supposed to act as if those were two separate roles.
FTA: "Price’s story rocketed around the world, a capitalist fairy tale to counter growing inequality."
Well we know bloomberg's feelings on the matter.
It takes a special kind of obstinancy and disingenuousness to claim that a young soldier throwing himself on a grenade to save his squaddies is acting in his own self-interest.
Once you've stretched the meaning of the word "altruism" to the point where you're conflating group selection with self interest, you're no longer able to communicate anything meaningful; you've reduced the informational content of your message to null in order to conform to ideological memes.
All of this noise is about the CEO and co-owner... but what about all the people below them? I'd be worried in their situation. I hope things work out for them.
He still hasn't actually given them all raises to $70K. It's a 3 year plan where at the end everyone will have a minimum of $70K salary. He cut his salary, mortgaged his property and sold all his investments to add cash to the company bottom line. He will be lucky if the company survives three years if he actually lives up to his promise.
Maybe, maybe the lawsuit helped motivate him to be more generous, but it isn't like he can drastically cut salaries later without insane backlash. A person can do a thing for more than one reason, it could well be that him fighting with his brother over money made him realize how petty they were both being.
Or nobody wants to be first, but once the floodgates open... Ever heard of Bill Cosby?
lucm, indeed.
The guy said, "4-digit ID" and my ID does in fact have 4 digits.
You remind me of a coworker who had a BMW keyring and was always talking about his beemer. His car was a $27,000 1-Series, cheaper than a Honda Civic with A/C, but hey, it was a BMW.
lucm, indeed.
*ignore*
Posting *ignore* is pretty much not ignoring. It means instead that you want to have the last word, like a petulant child.
Clearly what we've established in this thread is that having a somewhat-low-digit ID is not evidence of being clever, wise or funny. Thank you for your contribution!
lucm, indeed.