http://www.bloomberg.com/features/2015-gravity-ceo-dan-price/
Gravity Payments CEO, Dan Price told the company he was raising the minimum salary of all workers in the company to $70,000. It is said that this would double the wages of some of the employees. He planned to do this by cutting his own salary of $1.1 million.
He was criticized by some of the hgher paid workers saying that some of their wages are being taken away and some commentators have called him a socialist. He was praised many for the move and has been offered to go to many conferences to speak, write a book, and appear on TV shows. Now his brother who owns 30% of the company is suing him, claiming that he had paid himself too much from the beginning. Allegedly this lawsuit was brought about from his actions to raise the minimum wages. A move that was so praised has now caused a huge rift between him and his brother.
For company's of similar size, the CEO's have been paid significantly less. He refutes the claims that he was paid to much as the board, including his brother, have approved his pay raises.
9 comments:
There are two sides to consider in my opinion. First, offering higher wages would make his company more attractive in the market and would likely increase productivity (like in Henry Ford's case). However to be fair, he should make sure that those who had earned a higher wage would see a pay raise to reflect the fact that they have earned their relative value over the entry-level positions.
I agree with Tyler. However I do think that is he is raising rates, it should also reflect the productivity of the workers, wages are things that should be earned, not just increased because the boss wants to get a good reputation. But I also question why his regular salary was $1.1 million, while other companies with similarities paid their CEO's much less? However, I don't see this as him being socialist. As we have learned, a socialist leader would control basically every aspect of their workers, adjusting a salary for whatever reason doesn't warrant the title of being socialist.
Like Tyler mentioned, there are two sides to this dilemma. The higher wages could create an attractiveness and efficiency because they may be able to recruit the nations very best candidates because of the attractive salary. The fact that his salary was approved by the board, to me, does not indicate a reason to blast him for being paid too much from the beginning. If the company was seeing large growth in relation to competitors and the market indexes, then why shouldn't he be compensated for his efforts?
As Rachael mentioned, a raise in salaries should be something that is earned. Higher level employees should have been granted higher compensation for their work in addition to the entry level workers. Mr. Price is justified in his initial salary of $1.1 million because he had been receiving the board's approval. The situation would only be sketchy if the board had been unknowingly looking over certain aspects of the report. Lastly, there is definitely a positive spin on this, as it will increase productivity and incentivize prospective employees to want to work at this company.
I'm not sure why his salary is such an issue. He was not doing anything illegal in getting paid that much, so it is not clear why this would warrant a law suit from his brother.
I completely agree with Macie. I think because this was a controversial plan to some, that's why there's a lawsuit. Personally, I think a starting minimum salary of $70,000 is fairly decent and I think it says something about the character of the business and owner.
I think this will attract some of the best workers coming out of college and all over the country. Although, current employees who make over $70,000 should not have their pay decreased at all to make this happen. You want to attract the best workers, but you don't want to lose the efficient workers you already have.
I think it's hilarious that his brother is suing him, because if he believed that Dan Price was being paid too much originally he should have done something. Similarly, I find it flooring that he is suing his own brother, which shows just how greedy some people can be. Also, if he only owns 30% of the company, I wonder where the other 70% is. If his brother owns the other 70% I would say he is most likely justified in paying himself a higher salary. To comment on the wage increase, I believe that the bar shouldn't be risen for everyone, but different amount for different workers (depending on efficiency).
Very interesting perspective through all the comments and I agree with many of them. It seems as though his brother is just upset because some of the gains of the business which may go to him as an owner are now going to the workers. It may be that the workers are actually worth this much so the pay raise could be because he truly believes his employees are worth this much and could actually benefit the brother down the road with a stronger company.
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