Please create an account to participate in the Slashdot moderation system

 



Forgot your password?
typodupeerror
Compare cell phone plans using Wirefly's innovative plan comparison tool ×
The Almighty Buck Businesses

The Story of the CEO Paying Everyone $70k Gets Complicated 233

ranton writes: Dan Price, CEO of Gravity Payments, made news last April when he raised all employee salaries to at least $70,000. He claimed his motive was based on research that shows increased wages increase happiness up to about $75k per year. But according to a recent Bloomberg article this may have been a smoke screen. Karen Weise found Dan Price has been fighting with his co-founder Lucas Price over Dan's salary for years, and that his co-founder served him with a lawsuit weeks before the pay raises were announced. Apparently Dan had been paying himself nearly three times the salary of CEO's of similar sized companies in his industry, over the strong objection of his co-founder. The lawsuit was not officially filed until after the announcement, making it originally look like the pay rise caused the lawsuit. Now it appears to be the opposite. Since the lawsuit is trying to force the CEO to buy out his co-founder based on the CEO's prior greed, lowering the short term profitability of the company while boosting his positive PR seems to be a likely motive for the pay hike.
This discussion has been archived. No new comments can be posted.

The Story of the CEO Paying Everyone $70k Gets Complicated

Comments Filter:
  • by JoeyRox ( 2711699 ) on Wednesday December 02, 2015 @11:13PM (#51046673)
    "Price's life may get more complicated the week of Dec. 7, when TEDx plans to post online a public talk by his former wife, who changed her last name to Colon. She spoke on Oct. 28 at the University of Kentucky about the power of writing to overcome trauma. Colon stood on stage wearing cerulean blue and, without naming Price, read from a journal entry she says she wrote in May 2006 about her then-husband. "He got mad at me for ignoring him and grabbed me and shook me again," she read. "He also threw me to the ground and got on top of me. He started punching me in the stomach and slapped me across the face. I was shaking so bad."
  • by cfalcon ( 779563 ) on Wednesday December 02, 2015 @11:14PM (#51046679)

    I liked it better when he was an idealistic hippie. The idea that one moronic but well meaning CEO was doing bullshit to help people, even if it had long term ruinous consequences, was pleasant.

    Now it's just another greedy 0.1%er nomming up cash and playing a good game of sociopathic prisoner's dilemma. Boring. That's so ubiquitous in corporations that it's just a common stereotype in all the netflixes and youtubes. Hell, prolly the redtubes too.

    • by Jack Griffin ( 3459907 ) on Wednesday December 02, 2015 @11:23PM (#51046727)

      Now it's just another greedy 0.1%er nomming up cash and playing a good game of sociopathic prisoner's dilemma. Boring.

      You say that as if 1%'ers somehow behave differently from the other 99%? *Everyone* acts in their self-interest, you act surprised that having money would somehow change the laws of nature?

      • Re: (Score:2, Insightful)

        Now it's just another greedy 0.1%er nomming up cash and playing a good game of sociopathic prisoner's dilemma. Boring.

        You say that as if 1%'ers somehow behave differently from the other 99%? *Everyone* acts in their self-interest, you act surprised that having money would somehow change the laws of nature?

        I don't know about that. People vote against their own self-interest all the time, both at voting booths and with their money in the marketplace. All it takes to get them to do that is a little propaganda (or PR, or whatever you like to call it - I prefer the old term "manufactured consent" because it's more honest). It works all too well, even in the case of advertising in which the bias of the message is obvious.

        • by mattwarden ( 699984 ) on Thursday December 03, 2015 @12:59AM (#51047117) Homepage

          I'm always amazed how disconnected observers can somehow determine when someone is voting or buying against their interest. Your crystal ball is much more powerful than mine. Or perhaps you don't understand that economic value is personal and subjective.

          • I'm always amazed how disconnected observers can somehow determine when someone is voting or buying against their interest. Your crystal ball is much more powerful than mine. Or perhaps you don't understand that economic value is personal and subjective.

            The classic economic case is Betamax vs. VHS (VHS had better marketing), though certainly there are others. A recent voting case is the passage and public support of the PATRIOT Act and all of the people who don't have a problem with massive warrantless surveillance and are, in fact, apologists for it. The whole Prohibition fiasco is another, especially if you actually understand why it happened (alcohol was Ford's fuel of choice for his automobiles, and unlike oil, it could easily be produced independent

            • The whole Prohibition fiasco is another, especially if you actually understand why it happened (alcohol was Ford's fuel of choice for his automobiles, and unlike oil, it could easily be produced independently on a small scale, a position that Standard Oil didn't like -- but even if you didn't know that, trading some drunks for gangsters like Al Capone was a bad deal).

              I try not to reply to myself but I will add: what happened with oil money and the Women's Temperance Movement wasn't very different from what the MPAA/RIAA and others are doing today with intellectual property law, it's just more blatant now. In modern times the pretense that the government isn't supposed to be bought like that and made to serve corporate interests is taken much less seriously than it was nearly a century ago.

              Also, just like now with our surveillence society, when Prohibition was being

              • by lucm ( 889690 )

                the Women's Temperance Movement wasn't very different from what the MPAA/RIAA and others are doing today

                Don't forget MADD, another corrupt organization of women where they pocket half the money they raise from the gullible public.

                Shame on you, women.

            • You are really only going to be able to observe what you call "objective value" in hypothetical contrived examples that do not exist in reality, where there are only two variables (eg, price and reliability). But taking the far leap from that to "voting against your interest" is not compelling, to say the least. In my experience this complaint comes from left leaning individuals who would rather dismiss voters as dumb or irrational.

              • You are really only going to be able to observe what you call "objective value" in hypothetical contrived examples that do not exist in reality, where there are only two variables (eg, price and reliability).

                Really? There seems to be an entire review/product testing industry, of which Consumer Reports is one of the more well-known names. They seem to have been around a while. I would think they might be interested in your constructive criticism. I'm sure they'd rather stick to factual matters and not contrived hypotheticals, and imagine how much more successful they would be!

                Seriously though, if hand-waving dismissals are all you've got, you're not exactly coming from a strong position here.

                But taking the far leap from that to "voting against your interest" is not compelling, to say the least. In my experience this complaint comes from left leaning individuals who would rather dismiss voters as dumb or irrational.

                I'm far from

          • I'm always amazed how disconnected observers can somehow determine when someone is voting or buying against their interest.

            I'm not amazed that you're amazed, because you're a slashdotter and many of us seem to be short on imagination. It is often easy to tell when someone is voting against their own interest. For example, they vote democrat or republican. But even more than that, they vote for people who make empty promises. It's easy to see that voting for shit that is never going to happen is voting against your own interests.

            • by khallow ( 566160 )

              It is often easy to tell when someone is voting against their own interest. For example, they vote democrat or republican.

              And I can easy tell from the way you write that you voted for Kang.

        • So "acts in what they believe is in their self-interest" then, which I suspect is really what was being claimed anyway.

        • People don't vote against their self interest, take welfare for example there are two kinds of people that voted for it, the ones who will benefit from it and the others who feel good about themselves for doing so. In my experience it is impossible to vote against your self interest it's just that people value different things more then others.
        • I don't know about that. People vote against their own self-interest all the time, both at voting booths and with their money in the marketplace. All it takes to get them to do that is a little propaganda (or PR, or whatever you like to call it - I prefer the old term "manufactured consent" because it's more honest). It works all too well, even in the case of advertising in which the bias of the message is obvious.

          No, they believe they are voting/acting in their own self interest (as previous commenter asse

      • by ShanghaiBill ( 739463 ) on Thursday December 03, 2015 @12:02AM (#51046887)

        Never attribute to altruism that which is adequately explained by self interest.

      • Re: (Score:3, Insightful)

        by sg_oneill ( 159032 )

        You say that as if 1%'ers somehow behave differently from the other 99%? *Everyone* acts in their self-interest, you act surprised that having money would somehow change the laws of nature?

        You are aware that the "all actions are self interested" thing is pretty much a nonsense that economics stubbornly maintains over the objections of psychology and philosophy.

        Philosophers point out that all formulations of the statement are more or less tautological, psychologists point out that the claim simply doesnt lin

        • Re: (Score:2, Informative)

          by Anonymous Coward

          Philosophers point out that all formulations of the statement are more or less tautological, ...

          But its wrong.

          In my experience, tautologies have a tendency of being true.

          Free-market economic theory does rely partly on the claim "all action is self-interested" but, crucially, only on a tautological interpretation. I suspect that you're making the common error of misunderstanding either "action" or "self-interest" in this context.

          • Tautologies are meaningless. If you've defined self-interested action in a way that makes it impossible not to act in your self-interest, then you're no longer communicating anything meaningful. The trick people use is to come up with a tautological definition when pressed to defend their point, but imply a different definition the rest of the time so that people will take it as having meaning. This tricks people into thinking that people are choosing to be selfish, even though your hidden definition makes

          • by chihowa ( 366380 )

            In my experience, tautologies have a tendency of being true.

            If you redefine "tautology" to mean "something that has a tendency of being true", then yes: "tautologies have a tendency of being true." In reality, tautologies carry no information at all and are completely meaningless.

        • by N1AK ( 864906 )

          You are aware that the "all actions are self interested" thing is pretty much a nonsense that economics stubbornly maintains over the objections of psychology and philosophy.

          The issue with disproving, and proving, what someone's motivations are is that it's impossible to directly observe. In an experiment where someone can 'cheat' without risk of getting caught and benefit, you might consider someone who didn't cheat as acting against self-interest; however, they might have a strong moral compass and consid

          • by DarkOx ( 621550 )

            The other problem with determining self interest that you assume you know what someone wants in the first place.

            Extending your example. Lets say I know I can rig one of the few video games my girlfriend is will to play. There is a zero chance I will be discovered. She isn't going to look into the source code and see that I added:

            die_roll +=1 if player == 1 && die_roll 6

            You might assume I would want to win. After all she may attribute my victories to a superior sense of strategy and deeper under

        • by drinkypoo ( 153816 ) <martin.espinoza@gmail.com> on Thursday December 03, 2015 @07:04AM (#51048079) Homepage Journal

          You are aware that the "all actions are self interested" thing is pretty much a nonsense that economics stubbornly maintains over the objections of psychology and philosophy.

          [citation needed]

          By the way, you did notice that many of the studies upon which psychology is based couldn't be replicated? It's only barely a science, while philosophy is emphatically not a science. But you want to use them to make declarative statements. Good luck!

          psychologists point out that the claim simply doesnt line up with what we know about how the brain works.

          What we know about how psychologists work is that psychology is at least half bullshit, and I don't ask psychologists how the brain works. They don't get far enough into the chemistry to make useful statements. They're stuck at another level of abstraction.

          Of course everything is about self-interest. If our upbringing is "normal" because we are surrounded by "good" people who are smart enough to recognize that you should do good things for people who do good things for you and actually do so, then we learn to do good things for people in the hope that they will do good things for us. Some people don't have that. They turn out to be shitheels, or anonymous cowards.

      • *Everyone* acts in their self-interest

        Actually, a number of studies in the last decade have shown that this is not the case. Most people will balance self-interest with the interests of the people that they perceive as their tribal group (which, for some people, can be very large). The other interesting result is that most people project their own motivations onto others, so almost all sociopaths believe that everyone else is motivated solely by self interest.

        • by drinkypoo ( 153816 ) <martin.espinoza@gmail.com> on Thursday December 03, 2015 @07:10AM (#51048091) Homepage Journal

          psychologists point out that the claim simply doesnt line up with what we know about how the brain works. Most people will balance self-interest with the interests of the people that they perceive as their tribal group (which, for some people, can be very large).

          It takes a special kind of obstinacy and disingenuousness to fail to understand that this is working in one's own self-interest, especially when you're limiting it specifically to their tribal group. If that's the argument that psychologists are working on, then they're a bunch of morons. I hope the argument is more nuanced than you're making it out to be, because of course supporting your tribal group is acting in your own best interest. Nothing could be more obvious! Even sports fans get [misplaced] feelings of belonging, so they think that supporting the team is supporting themselves.

          Why are you willfully refusing to think? Just because you want to believe that people basically inherently behave the way you want them to? The evidence runs the other way.

          There is a reward loop for doing nice things to people. It's self-reinforcing, so we should not be surprised. The more surprising reward loop is making people angry. It turns out that sociopaths get a rise out of making people make a mad face. Just seeing that they made them mad makes them happy. A lot of people out there learned the wrong lessons. We may well naturally tend towards helping one another, but it's clearly not the dominant force. If it were, the world would look very different. How many of us don't even know our neighbors?

          • by vinlud ( 230623 )

            of course supporting your tribal group is acting in your own best interest

            That is a nice statement but individuals, even atheistic ones, sometimes do things for the benefit of their tribal group when it involves a certain death, instant or not. Soldiers, policemen, heroes, etc. The person itself cannot benefit anymore of these 'nice' things but still they will do whatever they think is the right thing. Your statement subsequently cannot cover everyone and every action, and therefor your subsequent statement that people refuse to think seems a bit ironic.

            • That is a nice statement but individuals, even atheistic ones, sometimes do things for the benefit of their tribal group when it involves a certain death, instant or not. ... The person itself cannot benefit anymore of these 'nice' things but still they will do whatever they think is the right thing.

              Everyone dies eventually; not everyone gets a chance to make their death mean something. If you have an interest in having a meaningful death, or you are interested in securing a benefit for your tribe, even an action which results in your own death may still serve your own self-interest.

              Self-interest is not limited to mere material benefit; it extends to anything you want to achieve. That is why in economics we say that everyone follows their own self-interest; it isn't a statement about selfishness or alt

      • Now it's just another greedy 0.1%er nomming up cash and playing a good game of sociopathic prisoner's dilemma. Boring.

        You say that as if 1%'ers somehow behave differently from the other 99%? *Everyone* acts in their self-interest, you act surprised that having money would somehow change the laws of nature?

        Yes but non sociopaths tend to feel pleasure and a sense of pride in helping other people. So they have a self-interest in helping others. Now this often ends up falling along the lines of helping people they can relate to, but at least they, in theory, want to help.

  • Or... (Score:5, Insightful)

    by joocemann ( 1273720 ) on Wednesday December 02, 2015 @11:23PM (#51046723)

    ....maybe there are two separate things going on here. One is Dan's pay, and the other is how much they're paying everyone else. How is it that they're conflating the two issues so that one seems like a smoke screen for the other? Is there even a rational connection between the two other than being about pay for people within the company?

    Is it possible that Dan wants to get paid a lot, but also wants everyone else to get paid well? Clearly the motivations to pay everyone else well are quite different from the motivations to pay himself lots of money. I think it's more reasonable to consider these as two separate things.

    • Re:Or... (Score:5, Insightful)

      by Crashmarik ( 635988 ) on Wednesday December 02, 2015 @11:35PM (#51046779)

      The motivation is that Dan doesn't want the company to show a profit so his brother's share is worthless.

      • Re:Or... (Score:5, Insightful)

        by roninmagus ( 721889 ) on Wednesday December 02, 2015 @11:47PM (#51046815)
        This. Looks pretty cut and dry to me. I love how everyone gushed all over it when it was announced. Made no sense to me that a business owner would make a decision like that out of the goodness of his heart. I know. I sound like a Scrooge.

        But that's how it is. Start your own business so you can be a shot-caller.
        • Re: (Score:2, Insightful)

          As has been noted elsewhere, the plans for the wage increase predate the lawsuit by a wide margin (the original wage discussion goes back to 2010), and short-term profitability has actually increased substantially since the wage increase. Also, it seems quite unlikely that a CEO could just raise wages in the time-frame necessary to act as the smokescreen suggested in the article.

          I'm not saying that Dan Price's motives are squeaky clean, but sometimes things that look pretty cut and dry really aren't... u

          • unless, of course, you decide that your preferred narrative is more important than the details

            Isn't that what usually happens? Most people don't care about discovering the truth, whatever that may turn out to be. If they cared about that, they wouldn't be so quick to judge. Instead, they would be asking more questions.

            What most people care about is highlighting events that appear to validate whatever worldview they cherish most, and ignoring, downplaying, or being offended by any credible information that doesn't. It's the reason why there's so precious little genuine dissent on this site. M

          • Re:Or... (Score:5, Insightful)

            by Crashmarik ( 635988 ) on Thursday December 03, 2015 @02:59AM (#51047463)

            Predate the lawsuit, not the dispute.

            Now who is clinging to a narrative ?

          • short-term profitability has actually increased substantially since the wage increase.

            the last Slashdot article on this story talked about the brain drain this caused when long-term employees that worked their way up from entry-level positions to mid-level positions paying $70K/year over the course of several years resented the new employee with no experience starting at the same pay level. The story also described how some (not a majority, but some) clients left because they felt the company was taking a

        • by Amouth ( 879122 )

          Some companies do still have integrity and really do care about their employees. I'm about to walk into a meeting in 6 hours where I will propose that the leadership receive no raises or bonuses this year so we can ensure steady cash flow for the business while being able to provide typical raises and bonuses to non leadership staff.

          I'll use the argument that it is our (leadership's) job to ensure the continued health of the business. When there is a downturn we must be accountable for it, not the people

          • by lucm ( 889690 )

            Did it work, or did they fire you?

            • by Amouth ( 879122 )

              Actually on break now, and they did they agree with my recommendation.

              Not all companies are evil and not all in leadership are PHBs

      • Re:Or... (Score:5, Informative)

        by seebs ( 15766 ) on Thursday December 03, 2015 @01:15AM (#51047161) Homepage

        In which case, it's backfired horribly, since all the coverage I've seen has said that it's actually been very good for business.

        • Re:Or... (Score:4, Interesting)

          by MyAlternateID ( 4240189 ) on Thursday December 03, 2015 @02:08AM (#51047347) Homepage

          In which case, it's backfired horribly, since all the coverage I've seen has said that it's actually been very good for business.

          Yes, but a lot of people get some kind of strange visceral satisfaction from seeing a plan backfire, even when it has no effect on their own lives. That tendency is especially noticable when the person implementing the plan is famous, wealthy, powerful, or generally successful in some way.

          Thus, several posters seem to have a vested emotional interest in a cynical motivation for this particular plan. Apparently their worldview would take a swift kick to the gonads if they were wrong about this one.

          Personally I'd be delighted to know that something somewhere was done for a good reason, and that this good reason was also the real reason. I'm not remotely naive enough to assume that, but if it should turn out to be true, it would be good news all the same.

        • There is good for sales and good for profitability they aren't the same thing.

      • The problem with that theory is that if it was the plan it backfired horribly. The companoes profits skyrocketed 4-fold since this was done.
        Which does not surprize me. Its a paradoxical but true observation that paying the best salaries in your industry is a key factor of being the most profitable.
        Its paradoxical nature means its rarely applied but businesses tgat do apply it tend to succeed. Henry Ford was another well known example.
        The key is to realize that wages are not an expense. Not even slightly. Wa

        • While paying the best in an industry can certainly work, the success of industries that move to low wage countries argues against it as a general rule.

    • One of the few things that will get an executive in trouble personally (other than typical crimes) is if they personally take money or otherwise gain at the expense of shareholders. A company president is allowed to pay everyone far too much if they choose to. They can give the company money away. The one thing they can't do is take the money for themselves. That's what he's being sued for, taking his shareholders' money for himself. So what defense can he possibly have for paying himself way too much ...

      T

      • One of the few things that will get an executive in trouble personally (other than typical crimes) is if they personally take money or otherwise gain at the expense of shareholders. A company president is allowed to pay everyone far too much if they choose to. They can give the company money away. The one thing they can't do is take the money for themselves.

        What? Who told you that? The CEO pretty much always gets the most compensation, how is that anything other than taking money at the expense of shareholders? The records of just how much of this cash the CEOs manage to pocket are public, so it's difficult to imagine why you would say something quite so ridiculous.

        • If you'd like to learn more about it, the term to google is "Fiduciary Duty". The officers are repreerntatives of the shareholders and legally obligated to act on behalf of the shareholders, not their own selfish interest (when the two conflict). Salaries of officers are typically set by the board, not by the officers themselves.

          A clear example which can get an officer sent to prison is if they simply empty out the corporate bank account (which is the shareholders money) and head overseas, where the spen

    • by AmiMoJo ( 196126 )

      If his plan really was to reduce short term profitability then it backfired badly. By all accounts the company is doing better than ever. As you say, TFA seems like wild speculation.

    • Is it possible that Dan wants to get paid a lot, but also wants everyone else to get paid well?

      His job description makes that mutually exclusive.

  • by mijkal ( 309880 ) on Wednesday December 02, 2015 @11:30PM (#51046753) Homepage Journal

    "Since the lawsuit is trying to force the CEO to buy out his co-founder based on the CEO's prior greed, lowering the short term profitability of the company while boosting his positive PR seems to be a likely motive for the pay hike."

    Except that short-term profitability has DOUBLED since wages increases commenced (source [marketwatch.com]). Did his plan then backfire?

    • Lawyers have to say what lawyers have to say - when the facts are against you, pound on the law. When the law is against you, pound on the facts. When both are against you, pound on the desk.

      I would think that a CEO who quickly doubles profitability and increases customer satisfaction is worth more than a run-of-the-mill CEO.

    • It was a fast growing company before, so we don't know what it would have been otherwise. In addition, it's easy to increase short term profits, in particular in a company like this. The question is whether the company will survive the next few years.

    • by Anonymous Coward on Thursday December 03, 2015 @02:00AM (#51047319)
      NO short term profitability has NOT doubled. rate of Revenue growth has doubled. That is not profitability. You can double the rate of revenue growth while at the same time double the amount you are losing. the article you linked to does not mention profitability and in fact says he invested another 3 million into the business. a finance company rolling in profit does not need additional cash injections and large pay cuts for the CEO.
      • by mijkal ( 309880 )

        The article [marketwatch.com] clearly states in second paragraph:

        "Revenue is growing at twice the rate it was before Chief Executive Dan Price made his announcement this spring, according to a report on Inc.com. Profits have doubled."

        • by Straif ( 172656 )

          Since he was effectively paying himself $1.1 million thereby reducing reported profits (the cause of the lawsuit) and he has yet to actually fully implement his new employee pay structure (it's a 3 year plan) wouldn't his cutting his salary by over $1 million in a company that only reported a $2.2 mill profit previously be responsible for the majority of the new bump.

          Just from his pay cut from what was a questionably legal salary the company's profits immediately jumped 50%. With the huge boost in free pub

    • citation please? that article only talks about revenue growth, no mention on whether they are even profitable let alone the rate of profit.
    • "Since the lawsuit is trying to force the CEO to buy out his co-founder based on the CEO's prior greed, lowering the short term profitability of the company while boosting his positive PR seems to be a likely motive for the pay hike."

      Except that short-term profitability has DOUBLED since wages increases commenced (source [marketwatch.com]). Did his plan then backfire?

      Either way he wins

    • "Since the lawsuit is trying to force the CEO to buy out his co-founder based on the CEO's prior greed, lowering the short term profitability of the company while boosting his positive PR seems to be a likely motive for the pay hike."

      Except that short-term profitability has DOUBLED since wages increases commenced (source [marketwatch.com]). Did his plan then backfire?

      Actually I'd expect the primary benefits to be short-term rather than long-term. One of the big effects of the pay hike was an ad campaign, the more time goes on the smaller the effectiveness of the ads but they're still paying the 70k salaries.

      There's other effects that might kick in long term (ie employee satisfaction & retention), but the biggest positive effects would come at the start.

  • by Anonymous Coward on Thursday December 03, 2015 @12:29AM (#51047003)

    No facts. Rampant speculation/innuendo/suspicion. Why do I read this page again?

  • SlashTMZ (Score:2, Funny)

    by Anonymous Coward

    Drama by Dice, served hot. Next up, women in tech!

  • ...if the lawsuit was dismissed/settled/whatever he'd be unable to un-raise all those salaries...

    The lawsuit reads to me as "Uh, bro, all those raises cut my profit sharing - you're a dick..."

  • FTA: "Price’s story rocketed around the world, a capitalist fairy tale to counter growing inequality."

    Well we know bloomberg's feelings on the matter.
  • All of this noise is about the CEO and co-owner... but what about all the people below them? I'd be worried in their situation. I hope things work out for them.

The reason why worry kills more people than work is that more people worry than work.

Working...