The CEO Paying Everyone $70,000 Salaries Has Something to Hide
bloomberg.com
bloomberg.com
But in a private business the owners can pay themselves whatever they want as long as all owners agree to it. The lawsuit is likely related to how not all owners agreeing with his 1.1 mil pay packet, and the article is arguing that his decision to cut it and give it away was because he knew the lawsuit was incoming (to head it off, essentially).
They try to raise a lot of other issues (e.g. that he claimed client turnover was 30%, when they claim it is 16% and up, but definitely less than 30%), but much of it comes across as almost petty, like they had one big interesting claim and tried to pad it out with a bunch of minor mis-speaking or other miscellaneous issues.
Ultimately it reads like a hit piece. Really they're just re-hashing the lawsuit and have nothing else to add of value.
That is not what the article is saying at all. It says that he initiated this pay raise after being sued because he payed himself too much.
The main thrust is that the narrative Price has been putting forward about the nature of the litigation against him is false. The evidence suggests that rather than being sued by his brother because his mass employee raise robbed the brother of profits, the raise was instead a tactic he used to minimize the profits of the company and thus his brother's claims on those profits.
That's because it turns out the lawsuit predates the raises, even though Dan Price denies that, even when confronted by the reporter with evidence to the contrary.
Dan Price co-owned Gravity with his brother Lucas. Dan Price became famous for raising his employees salaries so that none made under $70,000. Shortly he did that, a story broke that Dan was being sued by his brother Lucas, who was demanding that Dan buy his stake out. Dan and his spokespeople represented to the media that the suit was a reaction to the pay raise, which reduced profits for owners to pay employees.
But it turns out that Dan was served for the lawsuit before the pay raise, and that Dan's legal response to the suit also precedes the raise. It does not seem likely that the lawsuit had anything to do with the raise. It is now plausible (but unproven) that the raise was a tactical reaction to the suit.
Furthermore, Dan Price's ex-wife alleges that Dan was physically violent to her. And, Dan Price's own salary is anomalously high given the details of the company.
That's pretty much it.
It's been really weird to see everyone's reaction to this thing. Surreal almost. Didn't see Notch get this kind of hate when he shared his bonus with all employees. Perhaps it's because he works in the financial industry?
He's upset a lot of rich and powerful people who don't want their poor underlings to start asking why they aren't benefiting from the company's growth or profit margins.
Essentially he upset the status quo.
Then it sounds like to spite his brother (the minority partner) he came up with a self-promoting way to give those profits to other people; and enrich himself through speaking deals, etc. again at the expense of the minority partner.
It could be. There is definitely an adversarial relationship between owners and employees (both are competing for the same pie, in most models) and I'm comfortable guessing that many in the finance industry (including the industry media) identify more strongly with owners than employees. If such an identity is stronger, it's more than reasonable to expect that those with that identity will show undue bias towards those who seem to have a similar identity and against those who may be viewed as a type of adversary.
The industry appears to be founded on the idea of all profits flowing to owners. It seems reasonable that the industry would generally reject alternative models with little thought.
huh? You had me up until this point.
If this experiment, of giving up a bunch of profit (and his own pay), were to succeed and make the company more profitable, it would undermine the idea that selfishness is the best way to serve yourself.
See also: enlightened self-interest[1].
Ayn Rand founded/advocated a strong, determined branch of Libertarianism called Objectivism. In an over-generalizing nutshell, it's a philosophy, often economic, of individual freedoms over community needs (a strong negative over-reaction to bad socialism).
Debates usually get hung up on Tragedy of the Commons, and whether it actually exists as a meaningful concept or whether it can always be solved via private property ownership.
The first half of the game sets up the Founder Capitalist Figure as villan, and the second half portrays him as victim to a Bootlegger/Baptist Figure. I haven't read her stuff, but I seem to recall this plot being closer to a re-enactment, based second hand descriptions of the books. The later games do a somewhat better job though.
In that light, he is absolutely buying the loyalty of his employees, and being a private company, we really have no idea how sustainable the system really is. Worse, these things are path dependent. Getting a raise from 28k->32k will feel a lot different than going from 28k->70k->32k, even though the end state is the same. This is the sort of thing that can wreck companies.
I think sharks are circling because people have a zeal for debunking the idea that someone is selfless. If you Google it, you can even find people who criticize Mother Theresa for having secret, selfish ulterior motives.
I personally believe people who help others always get something out of it (even if it's just private satisfaction), and that's OK. A good act is a good act, regardless of the internal thoughts that triggered it.
The subtext of the story is that the raise was an unqualified win for one person, though: Dan Price.
2 employees out of 120.
What I've seen was from Christopher Hitchens, who said that she wasn't a "good" person because her primary motivation was to proselytize, as she believed Jesus instructed her to do.
My comment was creating an analogy between those two: Dan Price doing something awesome for his employees because of a lawsuit is something like Mother Theresa serving the poor because she believed it was how she would have a good afterlife.
I don't know if either of those motivations are true. It's impossible to know someone's motivations with certainty. That's why I think an action and its consequences are the thing to focus on.
If it's true, as the article says, that Dan Price is creating the cult of Dan Price (a do-gooder-CEO kind of thing), great! Even if he's just some narcissist who wants people to love him, I'm happy that another wealthy person is pursuing some form of humanitarianism. All the really "good" people might be narcissists, for all we know!
How does his motivation for giving the raises have an effect on whether this is a good way to run a business or whether it's sustainable?
And, in the context of this one issue at Gravity, it seems to have been a good move (at least what's been made public).
Pretty much every long-standing, famous CEO has done something for a personal reason (Jobs' personal vendetta against Samsung/Android for "ripping off" iOS is an example). That doesn't mean most of their decisions are personal, or that they can't run a company incredibly well.
Let me frame it this way. Let's say I was working there and thought I was getting underpaid. I started interviewing, found a job paying 65k, and was about to take it. There's some grand announcement about how everyone will get 70k and I decide, great, I'll stay. Had I been provided with what looks to be the real reason behind the raise, I may have elected to jump ship for less money.
That act alone, whatever the reason, is likely a "good" thing in that he is sacrificing his own income to help others less fortunate for himself. If there are ulterior motives, or if he has had a lifetime of bad deeds until now I'm not terribly interested.
I don't know how to write this comment in a short time span without coming across as a snarky a-hole but seriously, why are such piss-poor writers allowed to write for such serious publications? where the hell are editors and what are they doing? when did it become acceptable to hit 'publish' on such a shoddy amateurish article?
sigh
Editing is expensive[1]. The internet ripped the heart out of the print news business. Accordingly, editing has been cut back drastically pretty much across the board in response to increasingly tight budgets.
[1] Much more expensive than one might assume without having experienced the process. Coordinating among multiple people plus the back and forth iterative process that editing generates adds a lot of overhead to the writing process. Self editing is much faster (and therefore cheaper), but you get blind to errors that would jump out at someone else, and so errors slip through much more readily. Plus, other people are capable of challenging your assumptions in a way that you just aren't capable of since you aren't even always aware of your own assumptions.
Source: I've written informally at the margins for a reasonably, but not tremendously, high trafficked niche blog, and have participated a little in both edited and self-edited articles from both the writing and editing side. This was never industrial strength editing, so I imagine the cost to actual news outlets with higher standards is a lot higher than I have experienced.
Also, just very low emotional intelligence for not thinking about the people who got paid highly and deserved it. You didn't hire robots - you hired human beings with real emotions.
This is not my argument, but it's what I've been told when I've had this discussion before.
> Seriously, planks during meetings?
Sounds like an idea formed by people who don't really know how to run a business, and are looking for new and creative ways to get attention in the media.
The salary thing may be in the same category, and time will tell if the formula works well for the employees, or cuts their future total income short if the company can't keep momentum.
I would probably quit too. During a planking session. Grubbing around on the floor is no way to hold a meeting.
> At private companies with sales like Gravity’s total revenue, salary and bonus for the top quartile of CEOs is $710,000, according to Chief Executive magazine’s annual compensation survey. At companies with sales like Gravity’s net revenue, the top quartile pay falls to about $373,000. At companies with a similar number of employees as Gravity, the top quartile of CEOs makes $470,000 in salary and bonus. The CEO of JetPay, a publicly traded competitor that processes a similar volume as Gravity, received $355,000 in 2014.
$1.1 million on CEO salary sounds ridiculous given a $2.2m profit.
But agreed. If this were a public company, stockholders would probably be very unhappy that half of their earnings are being poached by some profesional executive with no skin in the game.
The article tries to paint an elaborate picture, but ultimately fails on all counts to point out the most basic problem with this story and that might have shed additional light on his motivations.
Basically, this guy want to use the Paris Hilton Syndrom to growth. I'll be famous coz I'm rich coz I'm famous coz...
We should suspend judgment until we have further evidence.
The benefits are obvious to anyone with half a brain - significantly better retention, a large pool of motivated applicants to choose from, and more companies doing business with them (mostly based on the ethics "brand"). The guy got first mover advantage here. Good for him.
Edit: Someone else says it's a hit piece, makes sense that the picture seems off if it is some filthy animal squandering the internet's time on savagery.