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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

#81

Post by jameshart »

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,…

CEO's fiduciary responsibility to whom, exactly? He's sole owner of the business.

Now, if he has loans outstanding, his bankers might raise an eyebrow about whether this move reduces his ability to repay; private investors would have a similar concern. But if he can demonstrate that his business will continue to deliver the returns he's committed to to those creditors, what does it matter to them whether he is spending additional money on his staff, or on replacing all the potted plants in his office, or on giving himself a big fat bonus?

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

#83

Post by cookiecaper »

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.

Bumping a salary is an ongoing expense and commitment, and it has several serious long-term consequences. You can buy 900k in publicity outright and be done or 900k in publicity by bumping salaries and have an ongoing commitment with very substantial HR and tax implications. They'd have to extract a lot more publicity than they could've gotten by paying a PR firm a million dollars to make it worthwhile. I doubt that's happened.

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

#84

Post by a_c_s »

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…

The NYTimes article clearly states that this was motivated by concerns about inequality rather than shifting what kind of people are hiring. If you have a source that contradicts this, it would be great to see it.

"His idea bubbled into reality on Monday afternoon, when Mr. Price surprised his 120-person staff by announcing that he planned over the next three years to raise the salary of even the lowest-paid clerk, customer service representative and salesman to a minimum of $70,000."

"“They were walking me through the math of making 40 grand a year,” he said, then describing a surprise rent increase or nagging credit card debt.

“I hear that every single week,” he added. “That just eats at me inside.”

Mr. Price said he wanted to do something to address the issue of inequality, although his proposal “made me really nervous” because he wanted to do it without raising prices for his customers or cutting back on service."

Source: http://www.nytimes.com/2015/04/14/business/owner-of-gravity-...

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

#85

Post by ergothus »

AndrewKemendo wrote: post #33

This company is not big enough to generate that kind of media attention organically, which tells me they made it into a press event. In that sense it rings hollow because it is clearly a publicity stunt. I think this is a general issue with all of these activities, and really any activity in a company, that you shape the message that you want to send to the world rather than there being an accurate representation of…

So in your world, nothing grows organically unless it's about a big company?

Success Kid has a bone to pick with you.

Granted, it's not ruled out that this is a paid publicity stunt, but frankly, it has all the right bits to be an attractive story without any sinister manipulation:

* CEO makes 1 mill - that's a very special number to people's minds. * The little guys make bank - everyone loves that!

I'm sure the company is happy to reap the rewards of attention (I'm sure their HR dept has no problem drawing applicants now!), and likely even tried to capitalize on the announcement in general, but frankly, this is exactly the sort of story that all my relatives* would tell everyone they know about, no push needed.

*Funny how "relatives": serves as a placeholder for "the non-savvy/cynical/technical masses". Guess I have my own streak of cynicism.

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

#86

Post by jobu »

colechristensen wrote: post #58
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…

You know what's terrible? How very unwilling nearly every company is to hire and train inexperienced workers while simultaneously complaining about not being able to find talent.

My previous company hired and trained college interns and new grads, but they made the mistake assuming some sort of loyalty and didn't bother to give them a significant raise after the first full year. It's crazy, but a developer with 1-2 years experience is worth 20-30% more than one fresh out of college.

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

#87

Post by cookiecaper »

pc86 wrote: post #23
IanDrake wrote: post #9

Pay? Do thy mean total compensation or salary? There are too many stories of CEOs dropping their salary to $1 just to find out later they got huge bonus, stock, and option grants. I don't care how much CEOs make. I do care about the bogus self congratulatory PR stunts meant to dupe the heard into thinking this company is inline with their thoughts on "social justice".

Well he owns the entire company, so theoretically he could take a disbursement of 100% of profits if he wanted to. Realistically a large portion of that is almost always reinvested in the business. Besides, which one is "more fair" of the two options (from this story specifically): - A CEO makes $1MM and owns 100% of a company making $2MM in profits every year. - A CEO makes $1.00 and owns 100% of a company making $5…

>a good move as a human being.

Giving people more of what they want is not automatically the correct move. It may sometimes be the correct move. You can cause a lot of harm by giving people what they want when they shouldn't have it. Look up info on how most people handle lottery winnings if you doubt this.

There are many less optimistic ways to interpret this change, and there may be some fallout down the road. I wouldn't jump straight to "a good move in general and a good move as a human being".

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

#88

Post by ryandrake »

ukigumo wrote: post #30
bko wrote: post #8

This is a valiant effort but I wonder how the practical allocation of the jobs is determined. If the market salary for an employee is 50k, if you raise it to 70k, you will probably have a lot more applicants than positions. Do the current employees get grand-fathered into the job despite more qualified candidates? When hiring new employees, how do you decide among the increasing rank of equally qualified candidates?…

Is there a direct correlation between higher qualifications and better performance and output? If having two equally qualified employees, is their salary requirement the only decisive distinction? I think this experiment will have quite a few positive net outcomes (publicity, reduction of cost with recruitment and retention, etc) but on the longer run employees making 70k will automatically know that they are on the…

Imagine if you were paid $500K/yr, but you knew it was the lowest salary paid to anyone in your company. How would that affect your morale? I know, personally, I would go home from work every night, absolutely thrilled at being the lowest paid person in my company :)

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

#89

Post by cookiecaper »

a_c_s wrote: post #84
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…

The NYTimes article clearly states that this was motivated by concerns about inequality rather than shifting what kind of people are hiring. If you have a source that contradicts this, it would be great to see it. "His idea bubbled into reality on Monday afternoon, when Mr. Price surprised his 120-person staff by announcing that he planned over the next three years to raise the salary of even the lowest-paid clerk, c…

Sometimes we don't reveal our true motives to The New York Times.

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

#90

Post by AndrewKemendo »

ergothus wrote: post #85
AndrewKemendo wrote: post #33

This company is not big enough to generate that kind of media attention organically, which tells me they made it into a press event. In that sense it rings hollow because it is clearly a publicity stunt. I think this is a general issue with all of these activities, and really any activity in a company, that you shape the message that you want to send to the world rather than there being an accurate representation of…

So in your world, nothing grows organically unless it's about a big company? Success Kid has a bone to pick with you. Granted, it's not ruled out that this is a paid publicity stunt, but frankly, it has all the right bits to be an attractive story without any sinister manipulation: * CEO makes 1 mill - that's a very special number to people's minds. * The little guys make bank - everyone loves that! I'm sure the comp…

So in your world, nothing grows organically unless it's about a big company?

Definitely not what I said, cause this isn't about "growth" or product. Internal accounting and salary changes at small tech companies don't find their way into all the major tech papers organically - especially not with accompanying video etc...

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