'American hero': CEO slashes his $1M salary to pay every employee $70K
They're calling him an American hero on Twitter.
Gravity Payments CEO Dan Price is slashing his $1 million salary so that the company can raise the minimum salary for every one of his workers to at least $70,000 a year.
When Price announced the raises to his employees this week, it touched off a flurry of Twitter reaction praising him for his selflessness.
Price says the raises will take effect over the next three years as he dials his own salary back to $70,000 and dips into company profits to ensure everyone else gets paid. Seventy of his 120 employees will get raises to bring them up to the minimum, with 30 of those employees slated to have their pay doubled.
Price's privately-owned company is expected to draw on 70 to 80 per cent of its projected $2.2 million in profits to pay for all the raises.
"I think that this hurts short-term, but pays for itself a few times over," Price said on Twitter.
Price was 19 when he founded Gravity Payments, a Seattle-based, low-cost credit card service company.
Now 30, Price says he got the idea to give back to his 120 employees after reading a scholarly study about the link between happiness and annual income. The 2010 study found people grew happier the closer they came to making about $75,000 a year. The study found money stopped improving people's emotional well-being after they passed the $75,000 mark.
"We conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being," wrote study authors Daniel Kahneman and Angus Deaton.
Price says he took the study to heart.
He also didn't bother worrying about the kind of precedent he was setting for CEOs of other companies, who typically make significantly more money than their employees.
"For me, the key is for us to lead however YOU think is right and not just follow what everyone else does," Price said on Twitter.
Price's employee-friendly move comes at a time when the wealth gap is growing between the mega-rich and the rest of the world's workforce. The richest one per cent of the world's population are projected to own more than half the world's wealth by next year, according to a report from the anti-poverty group Oxfam International.
Experts say the wealth gap is at its worst in the United States, where the country's wealthiest earners are seeing huge jumps in their annual salaries, while the rest of the American workforce sees only modest gains.
Many Twitter users applauded Price for turning in his one-percenter pay checks to help make life better for his rank-and-file employees.
Dan Price cut his salary from $1 million to $70,000 to top up his employees' salaries to match his $70,000. Dan Price is an American hero.— raja veerendiran (@flyinpotatoes) April 14, 2015
@DanPriceSeattle you are a great man! God bless you— Daniele D'Innocenzio (@ddinno) April 14, 2015
.@DanPriceSeattle Amazing, it is really cool to see a pro-active CEO care about their employees and are willing to make bold changes.— Martin Fuchs (@Onlineobserver) April 15, 2015
Dan Price, one awesome man! How many people would do this. Not to many. pic.twitter.com/RNhKpZJhLR— Michele (@MicheleWhiteman) April 15, 2015
Anybody else realize the CEO of Gravity Payments looks like a mix between Brad Pitt and that guy who plays Thor? #GravityPayments— Erik Dobell (@erikdobell) April 15, 2015