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CEO cuts his pay by almost $1M to give his employees big raises

latimes.com

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Re: CEO cuts his pay by almost $1M to give his employees big raises

#71

Post by emodendroket »

rebootthesystem wrote: post #46

Despite the feel-good angle on this it is a horribly bad and irresponsible decision. Now, if they only have a couple of people doing just below $70K it is a dishonest yet clever marketing move. It is a violation of a CEO's fiduciary responsibility to pay significantly more than market value for anything. That includes salaries. Example: CEO announces the company will pay double for all office supplies. Desks, chairs,…

I guess you could argue this if it was a publicly-traded company (although sometimes you get what you pay for). For a privately-owned company it's a totally irrelevant argument.

Re: CEO cuts his pay by almost $1M to give his employees big raises

#73

Post by danenania »

rebootthesystem wrote: post #46

Despite the feel-good angle on this it is a horribly bad and irresponsible decision. Now, if they only have a couple of people doing just below $70K it is a dishonest yet clever marketing move. It is a violation of a CEO's fiduciary responsibility to pay significantly more than market value for anything. That includes salaries. Example: CEO announces the company will pay double for all office supplies. Desks, chairs,…

But there's no such thing as an absolute market value for chairs--it's a function of quality (among other things). There are plenty of CEOs who choose to buy expensive chairs for their employees without causing any controversy.

Employee market rates are a function of quality too. If paying twice as much gets you employees who create three times more value, that shouldn't be a controversial decision either.

Re: CEO cuts his pay by almost $1M to give his employees big raises

#74

Post by smokeyj »

mattlutze wrote: post #51
smokeyj wrote: post #44

Earlier quoted context omitted.

The team as a whole becomes less sustainable. Profit margins went from 2m to 500k. That's a lawsuit away from being in the red. Is the entire team going to take pay cuts if profits aren't coming in? Does someone get fired? I think those lauding this as a morally virtuous move aren't basing this on principle. Hiring 1 employee for 100k isn't better than hiring 2 employees for 50k assuming equal qualifications. The tea…

If the gambit is that, in the recent future, they expect new business from the publicity to increase profits and cover part of the loss, I think the hit is not so large. And ultimately if it doesn't pan out, he can sell the company to a larger processor and cash his 100% stake out.

> And ultimately if it doesn't pan out, he can sell the company to a larger processor and cash his 100% stake out.

Do you honestly think that isn't plan A? He's going to flip the company, pocket the cash, and all those employees who experienced a temporary rise in salary will be unemployed. When Mr.CEO doles out equity instead of cash I'll give into the warm fuzzy feelings.

Re: CEO cuts his pay by almost $1M to give his employees big raises

#75

Post by emodendroket »

chatmasta wrote: post #36
dragonwriter wrote: post #25

Earlier quoted context omitted.

> The problem is it's unsustainable. The employees aren't providing $70k of market value. How do you know this? Sure, if you make the assumption that the before this one change, the world worked perfectly in line with the kind of simplifying assumptions that you might see in an Econ 101 class, then that would be true, but then, if the world worked that way, this raise wouldn't have happened .

Because they were willing to work for $40k.

How long would they be willing to stay at that rate? Raises aren't entirely altruistic.

Re: CEO cuts his pay by almost $1M to give his employees big raises

#76

Post by Rainymood »

CapitalistCartr wrote: post #5
crimsonalucard wrote: post #3

What about options? Does the CEO get options that raise his wage to a height that is still unfair?

"Price, who started Gravity Payments out of a dorm room when he was 19, wholly owns and operates the company . . . " Besides, what is fair?

No it's not fair, he doesn't deserve that company he put his whole life in! Nobody deserves such a thing!

\s

Re: CEO cuts his pay by almost $1M to give his employees big raises

#77

Post by PopsiclePete »

rebootthesystem wrote: post #46

Despite the feel-good angle on this it is a horribly bad and irresponsible decision. Now, if they only have a couple of people doing just below $70K it is a dishonest yet clever marketing move. It is a violation of a CEO's fiduciary responsibility to pay significantly more than market value for anything. That includes salaries. Example: CEO announces the company will pay double for all office supplies. Desks, chairs,…

I'm honestly glad this is one CEO who's not figuratively sucking the Wall Street c. I know* he's expected to do that for the good of Capitalism and all that junk, but, honestly, is pleasing a bunch of, basically, very-overpaid gamblers what we should strive for, as a society, as a culture, as a country?

What about happiness? Less stress? Not hating the 8-10 hours a day you spend of your life working? Why is funneling money up the chain to those that already have more than any human could possibly know what to do with, such a great thing ???

Yes yes. I know. I have a 401k too. We're all in on this, but I'm glad that somewhere, someone, decided to take one for the team, so to speak, and made a few dozen people happy. Just because he could. And if that pissed off a bunch of "investors" because the shares dropped from $82.52 to $81.88, I'm ok with that.

Re: CEO cuts his pay by almost $1M to give his employees big raises

#78

Post by ergothus »

golergka wrote: post #62
brianfitz wrote: post #32

I responded to this in a previous thread, but I think I can simplify it down to the perception versus reality of the change the CEO has enacted. What many people believe: The CEO has set a minimum compensation bar to help those with market wages below $70k. What has actually happened: The CEO has determined that going forward, he'd rather hire people with higher market wages and more experience versus paying lower wa…

Even if he didn't decide it, it would make similar effect: higher salaries would attract more people, and the company would eventually hire better workers (if they aren't complete idiots and are capable of selecting the best of the people applied).

The implication here is that (incapable of selecting the best applicant == complete idiot).

From what I've seen/heard/experienced, hiring is amazingly difficult, and the main reason most professions don't suffer a lot is that there is a large pool of sufficiently capable people that accuracy isn't necessary, and where tech and other profession particularly suffer (and thus expose the problems that are otherwise universal) is that demand far exceeds supply.

I'm hijacking your comment a little, since I agree with your base point that attracting better people would improve their applicant pool and I fully expect they'd see a benefit from this (whether my point is correct or not), but I did want to point out one of my pet areas of concern: We all suck at hiring.

Re: CEO cuts his pay by almost $1M to give his employees big raises

#79

Post by cookiecaper »

bko wrote: post #20
pc86 wrote: post #15

Earlier quoted context omitted.

Are otherwise qualified employees fired the moment a more qualified candidate expresses interest in their job? I don't see that being an issue. Perhaps what determines "qualified" will increase along with pay? I think it will certainly increase the overall quality of employees over time, and this may push out the least capable folks over time. Has there been any comment by the higher-paid-but-by-no-means-rich conting…

This kind of broad policy will almost certainly have unintended consequences that will be interesting to watch play out.

I agree. Realistically I think this will be a short-lived experiment; everyone who got the raise will keep it, but I wouldn't be surprised if they go back to paying new hires a market-competitive salary within 12 months.

Re: CEO cuts his pay by almost $1M to give his employees big raises

#80

Post by cookiecaper »

tallgirltaadaa wrote: post #43
icpmacdo wrote: post #2

Given this is the fourth time I have seen this on the front page I think it must be worth it for the free advertising alone.

this is my second time seeing it, and i still dont remember the company name... soooo maybe not

That's because no one is mentioning the company name -- it's just nameless CEO gives nameless employees more money. The company is Gravity Payments.
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